Radu, Romexterra: Banks will need capital

Small companies are the most affected by the economic turmoil, which is leaving them with delinquent loans, while the depreciation of the loan portfolio quality will eventually call for a capital increase for the banks in the system, says Adrian Radu, chief executive of Romexterra Bank. “It is a capital problem, not a liquidity problem. Any asset depreciation leads to a need for additional capital. Small banks are in a better position, because they will have lower capital needs. Parent banks will, therefore, have to make a smaller effort in the event of a need for capitalisation. And such a need will arise,” believes Adrian Radu. Out of the 43 banks in the system, only five have Romanian majority capital (state-held or private), with the rest being controlled by international groups. In January, the overall system saw the share of non-performing loans climb to 8.68%, one percentage point above the December level.