Romanian Banking System

Robert C. RekkersCEO, Banca Transilvania

27-28 March 2007

Contents

Developments

Macroeconomic Indicators

Banking System

Developments

Developments

Developments

Developments

Current account deficit:

2005: EUR 6.9 bn. (8.7% of GDP); 75.6% covered by FDI;2006 estimate: EUR 10% of GDP

Fiscal balance: 2005: 0.8% of GDP2006 estimate: 1% of GDP

FOREIGN INVESTMENTS IN ROMANIA (billion EUR)

1.14

1.29

1.12

1.62

3.3

5.2

9

0 1 2 3 4 5 6 7 8 9 10

2000

2001

2002

2003

2004

2005

2006*

Developments in 2005 - 2006

International reserves at a record level (FCY including gold):

2005: EUR 18.3 bn.; forex reserves EUR 16.8 bn. 2006: EUR 22.9 bn.; forex reserves EUR 21.3 bn.

Rating agencies upgraded Romania’s rating:

Fitch upgraded Romania’s foreign currency rating from BBB- to BBB with stable outlook on August 31, 2006Moody's upgraded Romania’s rating for short and long term borrowings both in FCY and in lei at Baa3/P-3, with stable outlook, in October 2006

Macroeconomic Indicators

annual percentage change

Source: NBR, NIS

Public debt was 20.1% of GDP in 2005 (domestic debt: 5.6% of GDP;

external debt: 14.4% of GDP)

Source: NBR, NIS

EUR billion

EUR billion

*) November 2006

Source: Ministry of Public Finance, NIS

percent

Banking System

Banking System in Romania

Weight of non-governmental loans in GDP (%)

17.5%22%

27%

88%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

2004 2005 2006* UE

Market shares in the banking system/Total Assets (%)

87.9%

5.3% 6.8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Banks with foreigncapital

Banks with local statecapital

Banks with local privatecapital

Source: NBR

Banking Sector in Romania (2006)

Features:

37 banks (of which 6 foreign bank branches)

61% of banking assets held by top five banks

Solvency ratio: 17.9%

Evolution of banking assets in Romania (bn. EUR)

15.3122.67

37.70

51

0

10

20

30

40

50

60

2003 2004 2005 2006

Source: NBR

Banking Sector in Romania

Banking Sector Concentration (Top 5 commercial banks)

December 2005 RON billion EUR billion % of total banking system

Assets 75.4 20.5 58.8

Loans 37.0 10.1 61.2

Deposits 52.4 14.3 57.0

Own capital 8.9 2.4 55.1

September 2006Assets 92.5 26.2 61.1

Loans 54.6 15.5 64.5

Deposits 61.5 17.4 58.8

Own capital 10.6 3.0 54.4Source: NBR

Conclusions• The evolution of macroeconomic ratios show a

positive outlook and an upward trend of the whole economy; Romania successfully achieved the targets set for its accession to UE marking an important turnaround point for its future development;

• Competition sharpened, especially in the banking system, but there is still place for growth, considering the low banking penetration in GDP; new important international players announced their intentions to step in;