Economy and Banking Sector of Romania

Romania is a country in Southeastern Europe, a member of the European Union since 2007.

Romania is an upper-middle income country with main industries being electric machinery and equipment, auto assembly, textiles and footwear, light machinery, metallurgy, chemicals, food processing, petroleum refining, mining, timber, construction materials.

The banking sector of Romania is highly concentrated and is dominated by foreign-controlled banks. Banks in Romania operate as universal banks.

Location Southeastern Europe
Population (2016)19 759 968 ↓ (-0.01%)
EU Status member since 2007
Economy
National Currency RON (Romanian new leu)
    Exchange Rate (2017-02-17) 1 EUR = 4.5223 RON
GDP 
    Nominal GDP (2015)160.4 bln EUR ↑ (+0.06%)
    Nominal GDP per Capita (2015)8 100 EUR ↑ (+0.06%)
    Real GDP Growth (2015)3.9 % ↑ (2014: 3.1 %)
Inflation Rate 
    CPI, MoM (Dec 2016)0.3 % ↑ (Nov 2016: 0.0 %)
    CPI, YoY (Dec 2016)-0.1 % ↑ (Nov 2016: -0.2 %)
    CPI, Year Average (2016)-1.1 % ↓ (2015: -0.4 %)
Unemployment Rate (2015)6.8 % ↑ (2014: 6.7 %)
Government Bond Yield (Dec 2016)3.73 % ↑ (Nov 2016: 3.56 %)
Credit Ratings (as of Sep 2016)
    FitchBBB- good credit quality, outlook stable
    Moody'sBaa3 lower medium grade, outlook positive
    S&PBBB- lower medium grade
Taxation
Double Taxation Agreements 80 signed agreements
Information Exchange 
    Exchange on Request 1 signed agreements
    Automatic Exchange starts in September 2017
FATCA IGA in effect since 28 May 2015, Model 1
Banking Sector
Financial Market Development 3.7 (max 7.0) rank: 86th out of 138 countries
    Banks' Soundness 4.4 (max 7.0) rank: 90th out of 138 countries
Deposit Guarantee Scheme 
    Maximum Protected Amount 100 000 EUR
Country Ceiling for Deposits 
    Local Currency (Romanian new leu)A3 upper medium grade
    Foreign CurrencyBaa3 lower medium grade
Deposit Rates (Nov 2016, RON)0.90 % ↓ (Oct 2016: 0.92 %)
Banking Sector Structure 
    Number of Banks39
    Recent Changes (2016) new banks: 1, closed banks: 0
    Consolidated Assets (2015) 84 545.60 mln EUR ↑ (+2.67%)
Major Banks
 Banca Comerciala Romana (Erste Bank)  Raiffeisen Bank
 BRD (Societe Generale)  UniCredit
 Banca Transilvania  Volksbank Romania
 CEC Bank
 List of Banks in Romania

Romanian Economy

National Currency

During the last 9 years EURRON exchange rate was within the range 3.6798 - 4.5800, reaching its maximum in Jul 2012 and falling to its minimum in Oct 2008.

Euro to Romanian new leu (EURRON).
Chart 1. Euro to Romanian new leu (EURRON). Source: ECB.
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GDP

According to Eurostat, nominal GDP of Romania in 2015 was 160.4 bln EUR.

Romania outperforms the European Union in terms of real GDP growth with the average annual differential coming to 1.6% over the past 10 years (2005 - 2015). In 2015 real GDP growth was 3.9% which was above the Euro Area average (1.6%) and above the European Union average (1.9%). Real GDP growth in 2016 - 2021 are IMF's estimates.

Real GDP Growth in Romania.
Chart 2. Real GDP Growth in Romania. Source: Eurostat, International Monetary Fund.

In 2015, nominal GDP per capita in Romania was 8 100 EUR.

Romania has a below-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, fell behind that of the European Union by -38.6% over the past 10 years (2005 - 2015). GDP per capita at PPP in 2016 - 2021 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Romania; European Union = 100.
Chart 3. GDP Per Capita at Purchasing Power Parity in Romania; European Union = 100.
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Inflation Rate

According to Eurostat, inflation rate in Romania in 2016 expressed as annual percentages of average consumer prices was -1.1% which was below the Euro Area average (0.2%) and below the European Union average (0.3%). Inflation rates in 2017 - 2021 are IMF's estimates.

Inflation Rate in Romania.
Chart 4. Inflation Rate in Romania. Source: Eurostat, International Monetary Fund.
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Taxation in Romania

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

Romania signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Albania
 Algeria
 Armenia
 Australia
 Austria
 Azerbaijan
 Bangladesh
 Belarus
 Belgium
 Bosnia and Herzegovina
 Bulgaria
 Canada
 China
 Croatia
 Cyprus
 Czech Republic
 Denmark
 Ecuador
 Egypt
 Estonia
 Finland
 France
 Georgia
 Germany
 Greece
 Hungary
 Iceland
 India (Dec 2013)
 Indonesia
 Ireland
 Israel
 Italy
 Japan
 Jordan
 Kazakhstan
 Korea, Democratic People's Republic of
 Korea, Republic of
 Kuwait
 Latvia
 Lebanon
 Lithuania
 Luxembourg
 Macedonia
 Malaysia
 Malta
 Mexico
 Moldova, Republic of
 Montenegro
 Morocco
 Namibia
 Netherlands
 Nigeria
 Norway
 Pakistan
 Philippines
 Poland
 Portugal
 Qatar
 Russian Federation
 San Marino
 Saudi Arabia
 Serbia
 Singapore
 Slovakia
 Slovenia
 South Africa
 Spain
 Sri Lanka
 Sweden
 Switzerland
 Thailand
 Tunisia
 Turkey
 Turkmenistan
 Ukraine
 United Arab Emirates
 United Kingdom
 United States
 Uzbekistan

There are also several agreements between Romania and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Uruguay
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Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Romania signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Guernsey

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Romania signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Further Information:
Automatic Exchange of Information on Financial Accounts
Countries Which Will Not Automatically Exchange Account Information

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FATCA

Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

Romania has FATCA agreement with the U.S. in effect since 28 May 2015 (Intergovernmental Agreement Model 1). Financial institutions operating in Romania are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Romanian financial accounts hold in U.S. financial institutions will be reported to Romanian authorities.

Further Information:
FATCA and European countries

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Romanian Banking Sector

Financial Market Development

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Romania is scored 3.7 out of maximum 7.0 and ranked 86th out of 138 analysed economies. Soundness of banks is scored 4.4 bringing Romania into the 90th place, trustworthiness and confidence of financial market is scored 4.6 (43rd place).

Financial Market Development in Romania.
Chart 5. Financial Market Development in Romania. Source: WEF.
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Deposit Guarantee Scheme

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Romania are summarised in Table 1.

Scheme Participantsall credit institutions operating in Romania, branches of non-EU banks, branches of Romanian banks abroad
Scheme Exemptionsbranches of EU-banks (covered by their home countries)
Eligible Depositorsnatural persons, legal entities
Covered Accountsany credit balance, including due interest
Maximum Protected Amount100 000 EUR
Paid In CurrencyRON

Table 1. Deposit guarantee scheme in Romania.

Further Information:
Deposit Guarantee Schemes in Europe

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Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local currency (Romanian new leu) deposit ceiling for Romania is set to A3 (upper medium grade), foreign currency deposit ceiling is Baa3 (lower medium grade).

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Deposit Rates

In Nov 2016, an agreed annualised deposit rate in local currency (Romanian new leu) of new contracts with agreed maturity up to 1 year between credit institutions and households was 0.90% .

Deposit Rates in Romania.
Chart 6. Deposit Rates in Romania. Source: ECB.

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Banking Sector Structure

Currently there are 39 credit institutions operating in Romania.

Recent structural changes (2013 - 2016) of the banking sector of Romania are summarised in Table 2.

2013201420152016
Number of Opened Banks1201
Number of Closed Banks1130

Table 2. Recent structural changes in the banking sector of Romania.

All the credit institutions operating in Romania can be classified into several categories. Table 3 summarises the number of banks in each category.

CategoryNumber of Banks
Banks30
Branches of foreign banks8
Central banks1

Table 3. Number of banks by category in Romania.

The list of the most recently opened banks in Romania is provided in Table 4.

NameStart Date
 ALIOR BANK SA VARSOVIA-SUCURSALA BUCURESTI (new)May 2016
 TBI Bank EAD Sofia - Sucursala Bucuresti (new)May 2014
 Veneto Banca Scpa Italia Montebelluna Sucursala Bucuresti (new)May 2014
 THE ROYAL BANK OF SCOTLAND PLC, EDINBURGH, - SUCURSALA ROMANIA (closed)April 2013

Table 4. The most recently opened banks in Romania.

There are 8 branches of foreign banks from 8 different countries in Romania. Table 5 shows the number of branches grouped by the country of origin.

Country of OriginNumber of Branches
 Belgium1
 Netherlands1
 Spain1
 Cyprus1
 France1
 Ireland1
 Bulgaria1
 Italy1

Table 5. Number of branches of foreign banks in Romania grouped by country of origin.

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