Featured Product

    IMF Publishes Report Under 2019 Article IV Consultation with Romania

    August 30, 2019

    IMF published its staff report in context of the 2019 Article IV consultation with Romania. While welcoming the strong banking sector performance, Directors noted that efforts to strengthen financial stability should continue, including sustaining the good progress on implementing the 2018 Financial Sector Assessment Program (FSAP) recommendations. They called for measures to increase resilience to risks stemming from high bank exposure to the Romanian state and encouraged close monitoring of the new tax on bank assets due to its potential impact on monetary policy transmission and credit allocation.

    The report highlights that the banking sector performance is strong, while facing the new bank tax. After several profitable years, banks have strong capital and liquidity positions and their non-performing loans (NPLs) have approached the EU average level. The banking system is stable, but the tax on bank assets creates some uncertainty. The tax could negatively affect the cost of bank credit to the private sector and linking the tax to performance targets could lead to distortions in the allocation of credit and resources. The policy uncertainty surrounding implementation of the tax as well as the recently introduced Consumer Credit Reference Index (IRCC) could hinder financial sector development.

    Good progress has been made to improve resilience, consistent with the 2018 FSAP recommendations. A majority of FSAP recommendations, including debt-service-to-income ratios and currency-differentiated liquidity requirements, have been fully or partially implemented. Additional progress in some areas, in line with FSAP recommendations, would further support financial stability. One such area is the introduction of a carefully calibrated systemic risk buffer, which would increase resilience of the banking sector under a high sovereign exposure. While the exposure of banks to the Romanian state approached 20% of assets in 2018, which is one of the highest in EU, the exemption of government bond holdings from the new bank tax could incentivize banks to further increase the exposure. The authorities broadly agreed with the financial sector assessment of the IMF staff. The National Bank of Romania stressed the good progress made on many FSAP recommendations. They shared the staff concerns over the sovereign-bank nexus and have been internally discussing an introduction of a systemic risk buffer. 

     

    Related Link: Staff Report

     

    Keywords: Europe, Romania, Banking, FSAP, NPLs, Systemic Risk Buffer, Financial Stability, Article IV, IMF

    Featured Experts
    Related Articles
    News

    HKMA Consults on Supervisory Policy for OTC Derivatives Transactions

    HKMA is consulting on revisions to the Supervisory Policy Manual module CR-G-14 on margin and other risk mitigation standards for non-centrally cleared over-the-counter (OTC) derivatives transactions.

    May 25, 2020 WebPage Regulatory News
    News

    PRA on Regulatory Capital and IFRS 9 Requirements for Payment Holidays

    PRA provided further information on the application of regulatory capital and IFRS 9 requirements to payment holidays granted or extended to address the challenges arising from COVID-19 outbreak.

    May 22, 2020 WebPage Regulatory News
    News

    HKMA on Fintech Adoption and Innovation by Banks in Hong Kong

    HKMA announced the publication of a report on fintech adoption and innovation in the banking industry in Hong Kong.

    May 20, 2020 WebPage Regulatory News
    News

    BIS on Impact of Increasing Use of Cloud Technology on Cyber Risk

    BIS published a working paper that examines the drivers of cyber risk, especially in context of the cloud services.

    May 20, 2020 WebPage Regulatory News
    News

    ECB Consults on Guide for Managing Climate and Environmental Risks

    ECB launched consultation on a guide specifying how the Banking Supervision expects banks to consider climate-related and environmental risks in their governance and risk management frameworks and when formulating and implementing their business strategy.

    May 20, 2020 WebPage Regulatory News
    News

    ECB Issues Opinion on Revisions to CRR in Response to COVID Crisis

    ECB published an opinion (CON/2020/16) on amendments to the prudential framework in EU in response to the COVID-19 pandemic.

    May 20, 2020 WebPage Regulatory News
    News

    EBA Assesses Interlinkages Between Recovery and Resolution Planning

    EBA published a report that examines the interlinkages between recovery and resolution planning under the Bank Recovery and Resolution Directive (BRRD).

    May 20, 2020 WebPage Regulatory News
    News

    SRB Publishes Final MREL Policy Under the Banking Package

    SRB published the final Minimum Requirements for Own Funds and Eligible Liabilities (MREL) policy under the Banking Package.

    May 20, 2020 WebPage Regulatory News
    News

    US Agencies Amend Interim Final Rule on Transition Period for CECL

    US Agencies (FDIC, FED, and OCC) published a final rule that makes technical changes to the March 31, 2020 interim final rule that provides a five-year transition period for the impact of the current expected credit loss (CECL) methodology on regulatory capital.

    May 19, 2020 WebPage Regulatory News
    News

    ECB Releases Results of March Survey on Credit Terms and Conditions

    ECB published results of the March 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives markets.

    May 19, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5208