Austrian group Erste finds Romania’s “greed tax” acceptable

The modified formula for Romania’s tax on financial assets (the “greed tax”) is “much less painful” than the original version passed at the end of last year that prompted panic in the market, Erste Group CEO Andreas Treichl commented in a conference dedicated to financial analysts and investors.

The group’s CFO Gernot Mittendorfer said that Erste’s Romanian subsidiary BCR would not take advantage of the two options that local banks have to avoid the greed tax: lower the loan-deposit interest rate differential and increase the stock of loans above a certain threshold set by the Government (8% this year), local Profit.ro reported.

Mittendorfer explained that Erste does not intend to cut the interest rate differential to get a tax cut because “the tax payment is only once while interest rates are forever.” He added that extending the stock of loans will depend on the economic environment and the demand for loans. An aggressive increase in the balance sheet will not be pursued to benefit from the tax incentive, he stated.

Erste’s subsidiary BCR is the second-biggest bank in Romania by assets.

(Photo source: Shutterstock)