Rasvan Radu, UniCredit CEO: Some banks might have to turn to shareholders for more money

The deterioration of the loan portfolios under the pressure of the RON depreciation could put several banks in the position of having to turn to their shareholders for more money, says Rasvan Radu (photo), chief executive of UniCredit Tiriac Bank. "There's a high chance that we will see capital increases at several banks in the system. The increase in risk cost and in the volume of ailing loans will reduce profitability and put pressure on the capital," Rasvan Radu believes. At the same time, the depreciation of the euro has a negative statistical impact on the solvency indicator, considering equity capitals are preponderantly denominated in RON, while balance sheets have a significant foreign currency component. "Given the more difficult environment, it is best that we have a higher solvency," Radu says, explaining that a comfortable solvency indicator level would be 10%. The latest NBR data reveal that the solvency indicator stood at 11.85% in September, compared with a minimum acceptable level of 8%. NBR officials, however, said last autumn that they had required a number of banks to perform capital increases, as their solvency indicator was going down fast. "There's no question of whether banks survive or not, but of how they will come out of 2009. There are other sectors, though, which could have problems - those connected to the automotive or real estate industries, but that depends on the extent of the involvement of the state," Radu says.