IFC: Local banks are sufficiently capitalised to absorb loan deterioration

The biggest risks for the Romanian economy are for it to be unable to cope with external vulnerability, to lack a business plan for the worst case scenario and to give in to the various negative factors, the head of the IFC (World Bank’s investment arm) mission to Romania, Ana-Maria Mihaescu, told ZF in an interview. As for the banking system, she says that in the current economic context, a deterioration of the credit portfolio is unavoidable, but that banks in Romania are well capitalised to absorb this deterioration. “This has shown in the data of the National Bank for the end of 2008, with loans listed as “doubtful” and “loss” accounting for a large share of overall loans. However, we believe the banks are well capitalised to absorb a deterioration of the loan portfolio, and the shareholders are willing to continue to offer their support,” says Mihaescu.