240 million Euros capital increases in the financial sector

Despite the losses reported by the financial and banking sectors over the past years, the foreign shareholders of banks, insurers and leasing companies of Romanian subsidiaries allocated EUR 240 between in January and July 2013 to capital increases. This comes as a confirmation that Romanian market is still attractive and has growth potential. The Romanian banking system reported in 2012 record-high loss of EUR500 million, thus, almost 50% of the total amount pumped in was directed at banks. That was the only viable option considering the market is very competitive and a transfer of loss to clients, by increasing fees, would negatively affect the banks over the long haul. 'The shareholders make capital increases, despite posting major losses, because they feel the negative results will be temporary and see a significant long-term potential. Such an attitude is encouraging, it is a good thing that investors who are familiar with the Romanian business world choose to continue their investments here,' says financial analyst Aurelian Dochia. The insurance sector faces a similar situation, though more complicated, since there have been continuously reported losses since 2005, losses in a total of EUR425 million. Although there's no sign of improvement at the moment, the insurance market is expected to grow in the coming years. “A large part of Romania’s population has not even heard about insurance products and this is a market of 20 million inhabitants,” Dochia concluded.

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