national bank of romania si interviuri/e20020516.pdfnational bank of romania spread of...

NATIONAL BANK OF ROMANIANATIONAL BANK OF ROMANIANATIONAL BANK OF ROMANIANATIONAL BANK OF ROMANIANATIONAL BANK OF ROMANIA

NATIONAL BANK OF ROMANIANATIONAL BANK OF ROMANIA

Summary� Moving closer to the Euro: real economy and external

sector

� Closer to the Euro: forex transactions, reserves, debt and the exchange rate

� Closer to the Euro: banking sector ownership and resilience;

� Closer to the Euro: progress in EU accession negotiations and upcoming legislative and regulatory

improvement

� Conclusion: progress in nominal and real convergence


–4.8

–1.2

1.8

5.34.5

1998 1999 2000 2001 2002p

Source: National Institute of Statistics

Real GDPannual percentage change


-5.7

-13.8

-4.8

-2.2

4.6

7.1* 6.68.2* 8.0

6.1

1998 1999 2000 2001 2002p


Gross Fixed Capital Formation and Industrial Output

gross fixed capital formation

industrial output

annual percentage change

*) based on 1998 output composition; for the previous years, data refer to 1995 output composition.


1997 1998 1999 2000 1997 1998 1999 2000

Czech Rep. 35.9 36.9 35.5 36.0 5.0 4.8 3.9 3.9Hungary 25.0 25.9 26.9 n.a. 5.8 5.4 5.3 n.a.Poland 28.1 28.1 28.2 29.0 5.7 5.5 5.2 5.0Romania 30.9 26.3 24.8 25.2 18.0 14.4 13.3 11.1Bulgaria 25.3 25.5 24.6 25.1 23.8 18.8 15.9 13.4Slovak Rep. 26.8 25.5 24.2 25.8 4.8 4.4 4.4 4.4Slovenia 28.0 28.1 27.3 27.7 3.7 3.6 3.2 2.9

Source: EBRD - Transition Report 2001 National Institute of Statistics (Romania)

Contribution of Main Economic Sectors to GDP Formation

INDUSTRY (as % of GDP)

AGRICULTURE (as % of GDP)


Openness of the Economy

53.0

60.1

71.075.2

1998 1999 2000 2001

percent

Source: National Institute of Statistics, NBR calculations


Foreign Trade by Group of Countries

0%

20%

40%

60%

80%

100%

1994

1995

1996

1997

1998

1999

2000

2001

2002

*

1994

1995

1996

1997

1998

1999

2000

2001

2002

*


Russian Federation

countries intransition

developingcountries

USA and otherdeveloped countries

EU

Exports Imports

*) March


Foreign Trade with EU

0

1

2

3

4

5

6

7

8

919

95

1996

1997

1998

1999

2000

2001

1995

1996

1997

1998

1999

2000

2001


USD billion

Exports fob Imports cif


Foreign Trade Composition by Currency

0%

20%

40%

60%

80%

100%

1999 2000 2001 2002* 1999 2000 2001 2002*

Source: National Bank of Romania

othercurrencies

GBP

USD

EUR

Exports Imports

*) March


3.2

4.0

6.1

6.6

6.7

7.0

8.3

8.7

10.4

14.7The Netherlands

Germany

USA

France

Cyprus

Austria

Italy

NetherlandsAntillesTurkey

United Kingdom

percent; as a share of total subscribed capital

Source: The Chamber of Commerce and Industry of Romania and Bucharest Municipality

Top-Ten Countries by Investment in Joint-Stock Companies in Romania as at March 31, 2002


Transactions on Interbank Forex Market by Currency

0%

20%

40%

60%

80%

100%Ja

n.98

Jan.

99

Jan.

00

Jan.

01

Jan.

02


Other

EUR

USD

0%

20%

40%

60%

80%

100%

Jan.

98

Jan.

99

Jan.

00

Jan.

01

Jan.

02

Purchases from clients Sales to clients


Public Debt as a Share of GDP

16.5 17.5 18.8 19.3

7.2

12.6 9.2 8.0

0

5

10

15

20

25

30

35

40

1998 1999 2000 2001

Source: Ministry of Public Finance, National Institute of Statistics

domestic public debt / GDP

foreign public debt /GDP

percent


Public Debt as a share of GDP*2001

0

20

40

60

80

100

CzechRepublic

Hungary Poland Romania Bulgaria Slovakia Slovenia

*) 6 months, except Romania

percent

Source: IMF, International Financial Statistics; national statistics for Romania


External Debt by Currency

54.0%

6.2%

39.9%

USD EURO other


March 31, 2002


MLT External Debt

0

1

2

3

4

5

6

7

8

9

10

11

1219

97

1998

1999

2000

2001

Mar

.02

public and publiclyguaranteed debt private debt

USD billionMLT External Debt / GDP

0

2

4

6

8

10

12

14

16

18

20

22

24

1997

1998

1999

2000

2001

public and publicly guaranteeddebt /GDP

private debt /GDP

percent

Source: National Bank of Romania, National Institute of Statistics


External Debt Indicators

8.8

7.66.9

2.7 2.8

4.0 4.2

7.06.9

3.3

0

2

4

6

8

10

12

1998 1999 2000 2001 2002 (Mar.)Source: National Bank of Romania

public and publicly guaranteed debt - months of goods-

and-services exports foreign reserves - months of goods-and-services imports

months


MLT External Debt Service

1,519

2,160

1,3681,841

2,0531,570 1,484 1,350

1,104

586

612

1,202

1,3281,040

708

665

716

726

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1998 1999 2000 2001 2002* 2003* 2004* 2005* 2006*Source: National Bank of Romania *) projection

private debt

public and publicly guaranteed debt

USD million


Spread of Romania's Eurobonds 2005, 2008 & 2012

250

300

350

400

450

500

550

600

650

700

750

800

Jul.01 Aug.01 Sep.01 Oct.01 Nov.01 Dec.01 Jan.02 Feb.02 Mar.02 Apr.02 May.02

Source: Reuters, Bloomberg

Spre

ad v

s. B

unds

(bps

)

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

12.0

12.5

Yiel

d (%

)

spread (2005)

spread (2008)

spread (2012)

yield (2005)

yield (2008)

yield (2012)

Note: Romania '05 was 660 bps over Bunds at launch and 300 bps on 10 May '02 Romania '08 was 592 bps over Bunds at launch and 358 bps on 10 May '03 Romania '12 was 565 bps over Bunds at launch and 364 bps on 10 May '03


Distribution by Investor

Insurance 7%

Pension3%

Banks42%

Asset Managers

48%

Distribution by Geography

Italy18%

UK18%

Germany27%

Switzerland7%

Benelux8%

Austria3%

France2%

Scandinavia1% Iberia

1%

US offshore2%

Greece13%

Romania's Eurobonds 2008

Source: Ministry of Public Finance


Distribution by Investor

Pension funds5.0%

Insurance6.0%

Other8.0%

Retail5.0%

Banks21.0%

Funds55.0%

Distribution by Geography

UK17%

USA11%

Italy17%

Greece4%

Austria3%

Spain4%

Switzerland4%

Scandinavia3%

Other4%

Netherlands6% Germany

27%

Romania's Eurobonds 2012

Source: Ministry of Public Finance


Nominal Exchange Rate

16,000

18,000

20,000

22,000

24,000

26,000

28,000

30,000

32,000

34,000

Jan.

00Fe

b.00

Mar

.00

Apr.0

0M

ay.0

0Ju

n.00

Jul.0

0Au

g.00

Sep.

00O

ct.0

0N

ov.0

0D

ec.0

0Ja

n.01

Feb.

01M

ar.0

1Ap

r.01

May

.01

Jun.

01Ju

l.01

Aug.

01Se

p.01

Oct

.01

Nov

.01

Dec

.01

Jan.

02Fe

b.02

Mar

.02

Apr.0

2M

ay.0

2


16,000

18,000

20,000

22,000

24,000

26,000

28,000

30,000

32,000

34,000

ROL/USD

ROL/EUR

ROL/basket of currencies(60%EUR+40%USD)

(Daily Data)


Real Exchange Rate*

75

80

85

90

95

100

105

110

115

120

125D

ec.9

8

Apr.9

9

Aug.

99

Dec

.99

Apr.0

0

Aug.

00

Dec

.00

Apr.0

1

Aug.

01

Dec

.01

Apr.0

2

index, December 1998=100

75

80

85

90

95

100

105

110

115

120

125


ROL/EUR

ROL/basket of currencies(60%EUR+40%USD)

ROL/USD

*) based on CPI differential between Romania and USA / Euro area


Real Exchange Rate of the ROL Against the EUR

60

70

80

90

100

110

120

130

140

150D

ec.9

8

Apr.9

9

Aug.

99

Dec

.99

Apr.0

0

Aug.

00

Dec

.00

Apr.0

1

Aug.

01

Dec

.01

Apr.0

2

index, December 1998=100

60

70

80

90

100

110

120

130

140

150


based on CPI differential between Romania and Euro area

based on PPI differential between Romania and Euro area

based on Romanian ULC

Appreciation (+)/Depreciation (–)


Real Salary Earnings and Labour Productivity in Industry

-25

-20

-15

-10

-5

0

5

10

15

20

25

1997 1998 1999 2000 2001 2002*

Source: National Institute of Statistics, NBR calculations

labour productivity

real salary earnings

annual percentage change

*) March


Gross International Reserves

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1999 2000 2001 2002 (Mar.)


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000commercial banks' forex reservesNBR forex reservesgold

USD million


Gross Official Reserves

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

1999 2000 2001 2002(May 16)Source: National Bank of Romania

USD million

NBR forex reserves

gold


NBR Forex Reserves Composition

0%

20%

40%

60%

80%

100%

1999 2000 2001 2002 (May.13)

othercurrencies

EUR

USD



Debt and Reserves

3,061

2,493

3,390

1,581 1,520

2,160

1,368

4,861

2,299

1,841

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

1997 1998 1999 2000 2001Source: National Bank of Romania

USD million

NBR gross reserves MLT external debt service(public and publicly guaranteed debt)


Share of Majority State-owned Banks* in Total Banks

0

10

20

30

40

50

60

70

80

90

100D

ec.9

1

Dec

.98

Dec

.99

Dec

.00

Dec

.01

Mar

.02


%

non-government credit total assetsnon-bank clients' deposits

Note: Starting Sep. '99 BANCOREX was subject to merger with BCR; Except BANC POST and Banca Română pentru Dezvoltare (BRD) starting Feb. '99 and Banca Agricolă (BA) starting Sep. '01.

*) Banca Comercială Română (BCR), Banca de Export Import a României (EXIMBANK), Casa de Economii şi Consemnaţiuni (CEC)

11.02.610.4

Banks with majority domestic state-owned capital1,2

1) including CEC; 2) excluding BCR

45.031.342.4

Banks with majority domestic state-owned capital1

52.265.154.4

Banks with majority foreign capital

Non-bank clients

deposits

Non-govt. credit

Total assets

share in total banks (%); March 2002


end-March 2002

CountryPercentage of total private

foreign share capitalPercentage of

total share capital

Greece 12.9 6.6 France 7.0 3.6 Austria 43.7 22.1 Netherlands 6.7 3.4 Italy 2.2 1.1 United Kingdom 1.7 0.9 Portugal 0.9 0.5 Total EU 75.1 38.2 Turkey 9.1 4.6 U.S.A. 8.5 4.3 Republic of Korea 2.2 1.1 Monaco 1.3 0.7 Other countries including EBRD 3.8 1.8 Total 100 50.7 Source: NBR

Foreign equity interest

Foreign Equity Interest in the Share Capital of Romanian Banks


Analysis Ratios for the Banking System

2.32.73.3

253.6

31.2

23.8

17.9

10.3

28.8 27.2

27.1

21.8

12.5

1.0

-15.3-20

-15

-10

-5

0

5

10

15

20

25

30

35D

ec-9

8

Dec

-99

Dec

-00

Dec

-01

Mar

-02


percent

-200

-150

-100

-50

0

50

100

150

200

250

300

350past-due anddoubtful claims /own capital(right-sidescale)

solvency ratio 1(>12%)

ROE (Netincome / Totalequity)

percent


The Weight of Banks Classified by the Five Composite Ratings in Total Bank Assets

0.0

70.8

19.4

8.0

1.83.4

76.4

16.0

3.8

0.4

10. 0

69. 1

17. 1

3 .4

0 .3

0.7

0.7

0.7

78.7

7.2

6.7

6.7

0.7

78.7

7.2

6.7

6.7

0.7

78.7

7.2

6.7

6.7

0.7

0.7

78.7

7.2

6.7

6.7

6.7

0.7

78.7

7.2

0

10

20

30

40

50

60

70

80

90

RATING 1 RATING 2 RATING 3 RATING 4 RATING 5


percent

December 1999

December 2000

December 2001

March 2002


Harmonisation of banking legislative and regulatory framework with EU Directives – steady concern of the NBR

� Progress in harmonisation of prudential supervision and accountancy practices :� New banking laws (1998), including subsequent amendments (the latest – 2001);� Regulatory framework for credit cooperatives (2000);� NBR’s norms:

� on access of credit institutions to banking business (minimum capital, licensing requirements);

� on banks’ pursuit of banking business (own funds, solvency, large exposures, derivatives);� harmonisation of accountancy practices: banks’ chart of accounts, introduction of the

International Accounting Standards, annual and consolidated accounts ;

� The relevant acquis will be fully incorporated in 2002– 2003:� amendment of The Banking Act (2002) and adjustment of the present regulatory

framework (2002-2003);� adjustment of bank chart of accounts and prudential regulations on pursuit of

banking business to the requirements of credit cooperatives (2002); � regulations on internal control of credit institutions (2002);� prudential regulations applicable to e-money issuers (2003);� regulations on consolidated supervision of credit institutions (2003 – 2004);� regulations on market risk management by credit institutions (2003 – 2004).


Regulatory Framework for Banks Type Prudential Regulation Comparison with EU

Standards Solvency Ratio 12% (risk-weighted) 8% (risk-weighted) Liquidity indicator Actual liquidity ≥≥≥≥ Required

liquidity

No liquidity indicator

Limits on lending (as % of own funds)

•

Credit concentration per client (group of connected clients)

20%

25%

•

Insider lending 20% (aggregate) 20% Limits on foreign exchange exposure (as % of own funds)

20% (overall) 10% (any one currency)

>>>> 2% excess multiplied by 8 to get capital adequacy

Minimum registered capital ROL 250 billion (EUR 8.85 million) EUR 5 million Loan classification and provisioning

0% for standard 5% for watch 20% for substandard 50% for doubtful 100% for loss

No EU-wide standards

Audited annual reports By audit companies External comprehensive audits

Source: NBR


Liberalisation of International Flows1998: liberalisation of current account operations (Art.VIII of the IMF’s Articles of Agreement);1999: liberalisation of medium- and long-term capital inflows2001: schedule of capital account liberalisation

*) including operations in units of collective investment undertakings

� direct and real-estate investment by residents abroad;� admission to quotation of national securities* on foreign capital

markets� collateral granted by foreigners to residents� personal capital movements� medium- and long-term loans related to commercial transactions or

services granted by residents to non-residents� capital transfers in performance of insurance contracts� collateral granted by residents to foreigners

Liberalisation of capital flows with significant impact on the balance of payments

Liberalisation of capital flows with low impact on balance of payments

Liberalisation of capital movements consisting of transfers in performance of insurance contracts and other capital flows with significant impact on the real sector

2004

upon accession to EU

2001-02

2003� acquisition by residents of traded foreign securities* (including OTC)� financial borrowings and loans with maturity less than 1 year

granted by foreigners to residents� financial borrowings and loans granted by residents to foreigners

� admission of foreign securities* to quotation on domestic capitalmarkets

� operations in ROL-denominated deposit accounts of foreignersopened with resident financial institutions

� operations in securities and other money-market specificinstruments

� operations in current and deposit accounts carried out by residentswith foreigners


Inflation Rate and Average Yield on 3M T-Bills

0

20

40

60

80

100

120Ja

n-99

Apr

-99

Jul-9

9

Oct

-99

Jan-

00

Apr

-00

Jul-0

0

Oct

-00

Jan-

01

Apr

-01

Jul-0

1

Oct

-01

Jan-

02

Apr

-02


percent

average yield on 3M T-bills (percent per annum)

inflation rate (percentage change against the same period of previous year)

22

2002

p


-2.6

-3.9-3.5 -3.6

-1.9

-4.0

-3.5

-3.0

1995 1996 1997 1998 1999 2000 2001 2002p

Source: Ministry of Public Finance, National Institute of Statistics

Fiscal Deficit as Share in GDP*

*) adjusted to IMF methodology

national bank of romania si interviuri/e20020516.pdfnational bank of romania spread of...

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