Romania’s National Bank (BNR) has recommended local commercial banks not to distribute dividends this year from last year’s profits, announced Cristian Popa, a member of BNR's board of directors, quoted by Ziarul Financiar.

“I want to point out that this is a recommendation and not a requirement. We emphasize that it is in the interest of the banks to be sufficiently well capitalized,” Popa said during a video conference organized by the Bucharest Stock Exchange Investors Association (ARIR).

This comes in line with the recommendations of the European Central Bank, which has recommended banks in the euro area to abstain from such moves until at least October 2020.

Separately, the BNR official highlighted the local banking system’s much better position compared to the 2008 credit crunch that needed an international agreement (known as the Vienna Agreement) to keep the subsidiaries of foreign financial groups in the region solvent.

“Compared to a decade ago, the banking sector is much better prepared to deal with the current situation, it is properly capitalized, the liquidity is quite good, and the debt level of the clients is much lower. We have reduced the [refinancing] interest rate, the central bank will start a government securities acquisition program. We are ready to reduce the rate of minimum reserve requirements, if needed, as a measure to increase liquidity in the market, so that the money circulates in the system and in the economy […] because we are here to provide liquidity and we have taken steps in this direction,” said Cristian Popa, quoted by Agerpres.

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