The Banking Environment
Economy
After the fall of the Communism in 1989, Romania started a series of political and economic reforms of which results started to show up at the beginning of 2000. After a decade of post-independence economic problems, Romania economic reforms were recognized once with the accession in the European Union at January 1, 2007. In the recent years, Romania started to register impressive levels of growth, driven by lively consumption and booming investment activity. The Romanians standard of life has been significantly improving, fuelled by rise of the real wages and easier access to credit.
The strong period of growth had also its reverse of coin that concretized in external and internal imbalances. While in the first 3 quarters of 2008, Romanian economy showed good resilience to the new deteriorated international environment, its vulnerability and exposure to the global financial crisis became apparent in the sharply decelerating Q4 GDP figures. The Romanian economy contracted 6.2 % yoy in the first quarter, as the poor development of the industrial sector, trade, tourism telecommunication services suffered from a collapse of EU and local demand. The economic adjustments also had a positive aspect, as it lead to a sharp correction of external deficit. Also the IMF support of EUR 20bn breathes life into the economy, as the package broadly equals the estimated size of Romania’s external financing gap for 2009. Romania hopes to adopt the euro by 2015.
Key economic indicators for 2008:
Population: 21 422 350
Economy: 55.4% of the economy is in the services sector, 25.6% industry, 7.2% agriculture and 11.8% construction.
GDP: EUR 136.9bn
Per capita GDP: EUR 6 391
Real GDP growth: 7.1%
Unemployment: 4.0%
Public debt: 20% of GDP
Central Bank
Romania has an independent central bank, the National Bank of Romania (Banca Nationala a Romaniei).
Banking System
There are 42 banks and 11 foreign branches that operate in Romania. The 26 banks with majority foreign capital represent around 79.8% of the net assets of the total banking system, while the foreign branched represents an additional 6.9%.
Currency
Romania’s currency is the New Romanian Leu (RON), which replaced the old Romanian Leu (ROL) as Romania’s currency on 1 July 2005. The rate of exchange is RON1 = ROL10,000.
Romania has been operating a floating exchange rate system with possible NBR market intervention. In recent years, the National Bank of Romania has intervened less in the market.
Taxation
See ‘Tax and Legal Template’.
Exchange Control
There are very few restrictions (see anti-money laundering) on residents holding foreign currency accounts both within and outside Romania. Residents may only hold local currency (RON) accounts abroad in countries with which Romania has agreed convertibility arrangements.
Non-resident accounts are also permitted. These can be denominated in the local currency (RON) and some foreign currencies. Local currency accounts require central bank approval. All accounts are fully convertible, subject to the presentation of supporting documents when required.
Although many restrictions have been lifted recently, Romania retains some exchange controls. The import and export of currency require customs declarations for amounts equivalent to EUR 10,000 (for foreign currency) and EUR 1,000 (for domestic currency). Money market transactions by non-banks require authorization by the National Bank of Romania.
Central Bank Reporting
All transfers between resident and non-resident bank accounts must be reported to the National Bank of Romania.
Although banks report transactions on behalf of their customers, the resident company is ultimately responsible for the accuracy of all reporting.