Some Problems on the Romanian Bank Segment in the European Union

• Author: Izabella Krajnik, Laura Olteanu
• Position: University Babes-Bolyai - Univ Babes-Bolyai
• Pages: 521-529

Some Problems on the Romanian Bank

Segment in the European Union

Krajnik Izabella1, Olteanu Laura2

1University Babes-Bolyai, 2Univ Babes-Bolyai

Abstract. Present article is the take a short glance at the Romanian bank segment after the accession to the

European Union. The an alysis deals with three major topics. In the first part the regulation environment is in focus,

dealing mostly the actual situation of the preparation works in the banks. The se cond part is dedicated to market

environment, market players, ranges of products and the technical-technological background. The third part is about

the macroeconomic environment of the Romanian bank segment. The aim of the article is the take a short

glance at the Romanian bank segment one year after the accession to the European Union. The analysis

will focus on three major topics: r egulation environment, market environment and macroeconomic

environment of the bank segment in Hungary.

Regulation environment

It can be told about the legal regulation of the bank segment that the legal regulation system is considerably

similar, almost the same, due to the structural reforms and the legal harmonization process of the last fifteen

years.

The main task of Romanian banks is related to the regulation environment: the preparation f or meeting the

capital requirements of Ba sel is in process at full speed, which will be obligatory also f or the already EU

member Romanian bank segment from 2006. Let us have a l ook at this issue in details.

1. 1. Regulation of Basel Capital Accord

The Basel Committee on Banking Supervision pu blished its capital conformity standards in 1988 under the name

‘Capital Accord’, in which the elements of the regulatory capital of the banks were defined and a unified

calculation method was intr oduced related to the balance sheet t otal weighted by ris ks. The agreement stipulated

a minimum value of 8% for the capital conformity rate deriving from the ratio of the guaranty capital a nd the

balance sheet total weighted by risks.

Due to the developme nt of the market and the crit icism of the banks, modification of the regulation was needed,

the first version of which was published in June 1999. After the consultation period in January 2001 the second

version was published, which was followed by a consultation period again. At the moment, the third version i s

the latest, which was published in April 2003 and will be applied from 2006.

The capital standards of Basel contain rules regarding t he risk management processes and the internal managing

and controlling systems. One of its main aspects is the f lexibility: it was defined in a wa y that it should be

suitable for defining the necessary capital requirements in case of institu tions of different size, structure and

business. The modified new regulation is more c omplex, and its flexibility resides in the range of the applicable

methods. This w ay it is possible for the institutions to use the most adequate approach regarding their risk

management systems.

The three main pillars of the regulation:

1. Minimum capital requirem ents: the first pillar consists of meth ods elaborated for setting the amount of capital

needed to cover the credit, operati onal and market risks. These m ethods can measure the risks of the assets in the

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