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Economy and Banking Sector of Romania

Romania
Location
Southeastern Europe
Population  (2017)
19 638 309  (-0.01%)
EU Status
member since 2007
Currency
RON (Romanian new leu)
Nominal GDP (2016)
169.6 bln EUR  (+0.05%)
Credit Ratings (as of Sep 2016)
BBB-/Baa3
Consolidated Banking Assets (2016)
88 202.04 mln EUR  (+4.32%)
Deposit Guarantee
100 000 EUR
Number of Banks
39

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.

List of Banks in Romania

National Currency

Romanian New Leu (RON)

Exchange Rate

1 EUR = 4.6625 RON (2018-02-16)

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.

GDP

Nominal GDP (2016)Nominal GDP per Capita (2016)Real GDP Growth (2016)
169.6 bln EUR  (+0.05%)8 600 EUR  (+0.06%)4.8 %  (2015: 3.9 %)

According to Eurostat, nominal GDP of Romania in 2016 was 169.6 bln EUR.

Romania outperforms the European Union in terms of real GDP growth with the average annual differential coming to 2.0% over the past 10 years (2006 - 2016). In 2016 real GDP growth was 4.8% which was above the Euro Area average (1.8%) and above the European Union average (1.9%). Real GDP growth in 2017 - 2022 are IMF's estimates.

Real GDP Growth in Romania.

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

In 2016, nominal GDP per capita in Romania was 8 600 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 -36.6% over the past 10 years (2006 - 2016). GDP per capita at PPP in 2017 - 2022 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.

Inflation Rate

CPI, MoM (Sep 2017)CPI, YoY (Sep 2017)CPI, Year Average (2016)
0.6 %  (Aug 2017: -0.3 %)1.3 %  (Aug 2017: 0.6 %)-1.1 %  (2015: -0.4 %)

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 - 2022 are IMF's estimates.

Inflation Rate in Romania.

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

Unemployment Rate

Unemployment Rate (2016)
5.9 %  (2015: 6.8 %)

Government Bond Yield

Government Bond Yield (Sep 2017)
3.89 %  (Aug 2017: 3.86 %)
According to Eurostat, government bond yield in Romania in Sep 2017 was 3.89%, compared to 3.86% in Aug 2017.
Government bond yield of Romania.

Chart 5. Government bond yield of Romania. Source: Eurostat.

Credit Ratings (as of Sep 2016)

Fitch Moody's
BBB- (good credit quality), outlook stable Baa3 (lower medium grade), outlook positive

Double Taxation Agreements

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

DTAs of Romania: 80 Signed Agreements

Romania signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 1 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 1 January 2013 of signing the agreement is given in brackets):

 Uruguay

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.

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

Exchange on Request: 1 Signed Agreements

Romania signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 1 January 2013 the date of coming into force is given in brackets):

 Guernsey

Automatic Exchange: Starts in September 2017

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

Automatic Excnange: 55 Bilateral Agreements to Receive Information

Romania has signed bilateral agreements with 55 jurisdictions to automatically receive information:

 Andorra
 Argentina
 Australia
 Austria
 Belgium
 Brazil
 Bulgaria
 China
 Colombia
 Croatia
 Cyprus
 Czech Republic
 Denmark
 Estonia
 Faroe Islands
 Finland
 France
 Germany
 Gibraltar
 Greece
 Greenland
 Guernsey
 Hungary
 Iceland
 India
 Ireland
 Isle of Man
 Italy
 Japan
 Jersey
 Korea, Republic of
 Latvia
 Liechtenstein
 Lithuania
 Luxembourg
 Malaysia
 Malta
 Mauritius
 Mexico
 Monaco
 Netherlands
 New Zealand
 Norway
 Poland
 Portugal
 San Marino
 Seychelles
 Slovakia
 Slovenia
 South Africa
 Spain
 Sweden
 Switzerland
 United Kingdom
 Uruguay

Automatic Excnange: 33 Bilateral Agreements to Send Information

Romania has signed bilateral agreements with 33 jurisdictions to automatically send information:

 Andorra
 Austria
 Belgium
 Bulgaria
 Croatia
 Cyprus
 Czech Republic
 Denmark
 Estonia
 Finland
 France
 Germany
 Gibraltar
 Greece
 Hungary
 Ireland
 Italy
 Latvia
 Liechtenstein
 Lithuania
 Luxembourg
 Malta
 Monaco
 Netherlands
 Poland
 Portugal
 San Marino
 Slovakia
 Slovenia
 Spain
 Sweden
 Switzerland
 United Kingdom

Further Information

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).

FATCA Status in Romania
IGA in effect since 28 May 2015, Model 1

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

Financial Market Development

Financial Market Development
3.7 (max 7.0), 88th out of 138 countries
Banks' Soundness
4.6 (max 7.0), 79th out of 138 countries

According to World Economic Forum's Global Competitiveness Report 2017-2018, financial market development in Romania is scored 3.7 out of maximum 7.0 and ranked 88th out of 138 analysed economies, trustworthiness and confidence of financial market is scored 4.7 (42nd place).

Financial Market Development in Romania.

Chart 6. Financial Market Development in Romania. Source: WEF.


Soundness of banks is scored 4.6 bringing Romania into the 79th place.

Soundness of Banks in Romania.

Chart 7. Soundness of Banks in Romania. Source: WEF.

Further Information

Deposit Guarantee Scheme

Maximum Protected Amount
100 000 EUR

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

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) Foreign Currency
A3 (upper medium grade) Baa3 (lower medium grade)

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).

Deposit Rates

Average Deposit Rate (Aug 2017, RON)
0.72 %  (Jul 2017: 0.77 %)
In Aug 2017, 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 0.72%.
Deposit Rates in Romania.

Chart 8. Deposit Rates in Romania. Source: ECB.

Further Information

Banking Sector Structure

Number of Banks
39
Consolidated Assets (2016)
88 202.04 mln EUR  (+4.32%)
Recent Changes (2016)
new banks: 1, closed banks: 0

Currently there are 39 credit institutions operating in Romania.

In 2016 consolidated banking assets in Romania were 88 202.04 mln EUR. The consolidated banking assets' evolution is shown at Chart 9 below.

Consolidated banking assets in Romania.

Chart 9. Consolidated banking assets 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.

The list of the most recently opened banks in Romania is provided in Table 3.

NameStart Date
 ALIOR BANK SA VARSOVIA-SUCURSALA BUCURESTI (new)May 2016
 TBI Bank EAD Sofia - Sucursala Bucuresti (new)May 2014
 VENETO BANCA SPA ITALIA MONTEBELLUNA SUCURSALA BUCURESTI (new)May 2014
 THE ROYAL BANK OF SCOTLAND PLC, EDINBURGH, - SUCURSALA ROMANIA (closed)April 2013
 

Table 3. The most recently opened banks in Romania.

All the credit institutions operating in Romania can be classified into several categories. Table 4 summarises the number of banks in each category.

CategoryNumber of Banks
Banks28
Branches of foreign banks8
Central banks1
Housing savings banks2

Table 4. Number of banks by category 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.

Major Banks of Romania

RankName
1 Banca Comerciala Romana S.A.
2 BRD - Groupe Societe Generale S.A.
3 BANCA TRANSILVANIA S.A.
4 CEC BANK S.A.
5 RAIFFEISEN BANK SA
6 UniCredit Bank S.A.
7 VOLKSBANK ROMANIA S.A. (closed)
 

Banca Comerciala Romana (Erste Bank)

Banca Comerciala Romana S.A. (BCR) was established in 1990 by taking over the commercial operations of the National Bank of Romania and in 2006 was acquired by Erste Bank (Austria). Banca Comerciala Romana provides universal banking operations (retail, corporate and investment banking, treasury and capital markets), and covers leasing operations, private pensions and housing financing through its subsidiaries.

Banca Comerciala Romana (Erste Bank) is rated by Fitch, Moody's. Long-term credit rating assigned to the bank by Fitch is BBB (good credit quality). Long-term credit rating assigned to the bank by Moody's is Ba1 (non-investment grade speculative). Banca Comerciala Romana (Erste Bank) participates in deposit guarantee scheme of Romania. This scheme covers accounts up to 100 000 EUR per bank per depositor.

BRD (Societe Generale)

BRD - Groupe Societe Generale (BRD) traces its roots back to 1923 when its ancestor, Societatea Nationala de Credit Industrial, was established. In December 1998, Société Générale Société Générale subscribed a 20% capital increase and purchased a stock that allowed it to own 51% of BRD's increased capital.In 2001, BRD was listed on the Bucharest Stock Exchange. In 2004, Société Générale purchased the residual stock held by the Romanian State in the capital of BRD. BRD operates as a universal bank providing retail and corporate banking products and services to individuals, SMEs and business entities. Through its subsidiaries BRD offers asset managament, insurance and pension solutions.

BRD (Societe Generale) is rated by Fitch, Moody's. Long-term credit rating assigned to the bank by Fitch is BBB+ (good credit quality). Long-term credit rating assigned to the bank by Moody's is Ba1 (non-investment grade speculative). BRD (Societe Generale) participates in deposit guarantee scheme of Romania. This scheme covers accounts up to 100 000 EUR per bank per depositor.

Banca Transilvania

Banca Transilvania was founded in 1994 as a local bank, but rapidly expanded to the regional and then national level. Banca Transilvania operates as a universal bank, offering retail, private and corporate banking products and services.

Banca Transilvania is rated by Fitch. Long-term credit rating assigned to the bank by Fitch is BB (speculative). Banca Transilvania participates in deposit guarantee scheme of Romania. This scheme covers accounts up to 100 000 EUR per bank per depositor.

CEC Bank

CEC Bank is a universal commercial bank offering diverse and high-quality bank products and services to its clientele, focusing mainly on financing agricultural SMEs, public administration, as well as those banking projects that, by their nature, contribute to the economic development of Romania.

CEC Bank participates in deposit guarantee scheme of Romania. This scheme covers accounts up to 100 000 EUR per bank per depositor.

Raiffeisen Bank

Raiffeisen Banking Group (Austria) established a representative office in Romania in 1994. In 1998 it was transformed into a subisidiary Raiffeisen Bank (Romania), which was providing banking products and services for companies. Now Raiffeisen Bank (Romania) operates as a universal bank providing retail, private and corporate banking products and services to individuals, SMEs and companies.

Raiffeisen Bank is rated by Moody's. Long-term credit rating assigned to the bank by Moody's is Ba1 (non-investment grade speculative). Raiffeisen Bank participates in deposit guarantee scheme of Romania. This scheme covers accounts up to 100 000 EUR per bank per depositor.

UniCredit

UniCredit is one of the largest European commercial banks. UniCredit is focused on providing financial products and services in Western and Central and Eastern Europe. UniCredit has 4 main business lines: commercial banking (including retail, direct, private and business banking), corporate and investment banking, asset management and asset gathering.

UniCredit is rated by Fitch. Long-term credit rating assigned to the bank by Fitch is BBB (good credit quality). UniCredit participates in deposit guarantee scheme of Romania. This scheme covers accounts up to 100 000 EUR per bank per depositor.

Volksbank Romania

In November 2015 Volksbank Romania was acquired by Banca Transilvania S.A.

Volksbank Romania participates in deposit guarantee scheme of Romania. This scheme covers accounts up to 100 000 EUR per bank per depositor.

Savings Accounts: 5 Offers from 1 Bank

Interest Rates: 0.50 - 0.50 % p.a.
Account Terms: 1 - 12 months

5 savings accounts offers from 1 bank operating in Romania are currently available. The savings accounts terms vary from 1 month to 1 years (12 months). The interest rates are within the range 0.50 - 0.50 %.

View All Offers
Highest Interest Rate Offer: Tagesgeld (ALPHA BANK ROMANIA S.A.)
Interest Rate: 0.50 % p.a.
Account Term: 1 months

Alpha Bank Romania was established in 1993 by the European Bank of Reconstruction and Development and Alpha Bank Group (Greece) as Banca Bucuresti SA and started its operations in 1994. In 2000 Banca Bucuresti SA was renamed to Alpha Bank Romania. Alpha Bank Romania operates as a universal bank providing a broad range of services and products for individuals, SMEs and companies.

Time Deposit Accounts: 8 Offers from 2 Banks

Interest Rates: 0.50 - 2.00 % p.a.
Deposit Terms: 6 - 120 months

8 time deposit accounts offers from 2 banks operating in Romania are currently available. The time deposit accounts terms vary from 6 month to 10 years (120 months).The interest rates are within the range 0.50 - 2.00 %.

View All Offers
Highest Interest Rate Offer: Festgeld (ALPHA BANK ROMANIA S.A.)
Interest Rate: 2.00 % p.a.
Deposit Term: 120 months

Alpha Bank Romania was established in 1993 by the European Bank of Reconstruction and Development and Alpha Bank Group (Greece) as Banca Bucuresti SA and started its operations in 1994. In 2000 Banca Bucuresti SA was renamed to Alpha Bank Romania. Alpha Bank Romania operates as a universal bank providing a broad range of services and products for individuals, SMEs and companies.