Moody’s: Romanian Banks Under Increasing Outside Pressure

In a special comment released earlier today, Moody’s said the crisis is likely to affect Romania’s banking system through several channels, including a weakening demand for exports and a slowdown in foreign direct investment, as well as a potential weakening of parent banks’ commitment to their operations in the country.

Romania’s high level of foreign-currency lending, which accounts for over than 60% of total loans, represents an additional risk factor for the local system, the agency noted.

“These transmission mechanisms will likely reduce funding availability, weaken asset quality, increase losses and pressure capital; which, in turn, may increasingly exert pressure on bank ratings in Romania,” Moody’s said.