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Southeast Europe
January 18, 2019 www.intellinews.com I Page 17
Romania’s banking stocks on rollercoaster amid tightening regulations
Iulian Ernst in Bucharest
The shares of Romania’s largest bank, Banca Transilvania, plunged by nearly 10% in the first part of the January 15 trading session then went on to recover almost the entire loss and end
the day with a marginal 1% decline. And there were warnings its shares might dive again as more bad news for the banking system surfaces: the government is considering limiting the deductibility of the loan loss provisions.
Sentiment remains volatile in the market as foreign banks have not yet consolidated a firm view over the package of measures (partly) announced by the authorities: while CEO Raiffeisen Bank International Johann Strobl was commenting in Vienna about foreign banks “not being welcome” in Romania, UniCredit’s East and Central Europe’s head Carlo Vivaldi was conveying a more moderate message (“we are ready to discuss with the authorities”).
The European Central Bank (ECB) stepping into the debate to moderate the Romanian authorities' interventions might provide certain protection
to the banks' shares, but such a scenario is still premature.
Speaking of the latest bad news, Ziarul Financiar daily reported that loan loss provisions might
be deductible for fiscal purposes only when
the losses actually occur (as opposed to at the moment of provisioning, under the current
regulations). Such tighter regulations are being prepared by the government and the banks are aware of this, the daily commented.
Banca Transilvania’s shares were trading at RON2.35 on December 18, before the government announced the emergency decree that set a special tax on bank assets, to drop to RON1.7
at the end of January 15, meaning the bank lost more than a quarter of its market capitalisation. This is enough to provide certain support for its price against further losses.
The other major bank traded in Bucharest, BRD-Socgen lost “only” one-fifth of its market capitalisation over the same period of time.
The banks’ recovery during the second half of
the day was not driven by good news (except possibly by the speculation about the ECB intervening to soften the bank taxation), but rather technical trading. On the contrary, Ziarul Financiar daily reported that foreign banks in Romania were attending Euromoney meeting
in Vienna where their managers expressed perplexity with the Romanian government’s total lack of transparency. In the absence of any official clarifications, banks expect the worst in terms of the financial assets tax. Even more than the tax, the government’s refusal to discuss the issue with banks is the most annoying, anonymous sources within the banks told the daily.