Bloomberg News

BRD’s CEO Sees No Direct EBA Rules Impact, Plans Bond Sale

February 14, 2012

(Updates with comments from second paragraph.)

Feb. 14 (Bloomberg) -- BRD-Groupe Societe Generale SA Chief Executive Officer Guy Poupet said he expects no direct effect on the Romanian banking industry from European limits imposed on western parents, even as his bank plans to tap funding on its own through bond sales.

BRD, Romania’s largest publicly-traded bank, is seeking to sell its first euro-denominated bonds in the middle of the year as part of a medium-term notes program, after it finishes the necessary paperwork by May, deputy Chief Executive Officer Claudiu Cercel said in an interview today. The bank plans to diversify its funding sources, according to Poupet.

“Romanian banks are now in a situation of very good ratio of liquidity and solvency and there is no particular pressure on our positions,” Chief Executive Officer Guy Poupet said in another interview.

New capital and liquidity requirements for western banks, such as BRD owner Societe Generale SA, UniCredit SpA of Italy and Austria’s Erste Group Bank AG, threaten to curb credit needed to fund the region’s companies and households.

European Banking Authority told banks to have core capital reserves of 9 percent by the end of June after writing down their holdings of sovereign debt. That may require an additional 115 billion euros ($152 billion) of capital, according to the EBA.

2011 Losses

Romania’s banking industry, which is about 90 percent owned by international lenders, posted a total loss of 100 million euros last year, Nicolae Cinteza, the head of the central bank’s supervision department, said on Feb. 8. It was the second consecutive year of losses for the industry following a lending boom between 2006 and 2008 ended after the worst recession on record in the country.

BRD wants shareholder approval to increase an already approved medium-term notes limit to as much as 2 billion euros from 600 million euros, Cercel said. The bond-selling program will last three years, he said.

The bank, Romania’s second-biggest by assets after Erste’s Banca Comerciala Romana SA, won’t need a capital increase this year and may use part of its 2011 profit, of 465 million lei ($141 million), to strengthen its reserves, according to Poupet.

--Editor: James M. Gomez

To contact the reporters on this story: Andra Timu in Bucharest at atimu@bloomberg.net; Irina Savu in Bucharest at isavu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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