Fitch: Romanian banks face higher risks in the context of the international crisis. Adoption of European currency possible in 2015

International rating agency Fitch considers that the global financial turbulences amplified the risks for Romanian banks. The analysts with the agency expect a lower banking financing availability and increased costs for credits, a situation that may lead to an economic slowdown.

The current account deficit makes the Romanian economy vulnerable to the deterioration of the global business environment and to the cash pressure on the international level. As a consequence, Fitch analysts say, the bank financing will become less available and more expensive, which will cause a slowdown in the economic activities, a quality decrease of credit portfolios and less profitability, the „Romanian Banks – Annual Review and Outlook” report publish on Friday by Fitch notes.

The Romanian banking system is mostly owned by foreign shareholders (88% of all assets) and is highly concentrated. The mother-banks abroad provided much of the financing that fueled the fast credit growth in the past few years.

The credits / deposits report is also high (127% at the end of Q1 in 2008) and the system depends on foreign financing.

Fitch also considers that Romania will not adopt the European currency before 2015, since it needs time to obtain true and nominal convergence. Romanian authorities set 2014 as target foe Euro adoption.

According to an EEC report in May, Romania meets only one of the criteria required for adopting the European currency, namely the budgetary stability, but it fails to respect the issues related to inflation, exchange rate and long term exchange rates convergence.