Romania: Crisis Leads to More Private Banking Investments

The portfolio value of private banking clients has recently increased in Romania, as businesspeople would rather have lenders manage their savings amidst the current financial crisis and wait for a more appropriate time for new transactions.

We are managing assets 25 percent higher than at the end of last year, Octavia Cutus, Raiffeisen Bank's manager of private banking, was quoted as saying Thursday the local daily Business Standard.

Cutus said Raiffeisen's private banking department has more than 2,000 clients, with the value of their portfolios exceeding 500 million euros (645 million U.S. dollars).

In October, we registered a withdrawal of funds, due to the uncertainty, but clients brought back their funds, because they trust that the bank is solid, and due to the fact that private banking services are more advantageous than other investment options, Cutus said.

The main impact of the financial crisis has been that clients are focusing on longer term investments and state bonds, including Euro bonds. State bonds make up about 10 to 12 percent of total assets managed by the private banking department.

The ratio of shares and mutual fund titles dropped to 5 percent, from 10 percent before the crisis broke out. Bank deposits are currently preferred.

Private banking services have taken advantage of the crisis. After hesitations in October, existing clients were joined by new ones, who have business mainly in the Real estate field, said Monica Ionescu, UniCredit Tiriac Bank's head of private banking operations. The department has about 1,300 clients with total assets exceeding 270 million euros (348.3 million dollars).

Businesspeople would rather wait for new opportunities next spring, when the crisis is expected to peak, and they opt for private banking services, said Alex Titus Dumitrescu, private banking manager of Romanian Commercial Bank.

Assets managed by the private banking departments of local lenders exceeded 3 billion euros (3.87 billion dollars) at the end of the first half of 2008. The market leader is Commercial Bank, which has one third of the market. Other significant players are Raiffeisen Bank, UniCredit Tiriac Bank, BRD Groupe Societe Generale, and ING.

Source: CRIEnglish