"I'm surprised to learn the European Commission's view against Romania recapitalising CEC, the bank owned by the state. I agree with your evaluation according to which CEC was not facing liquidity and solvability issues. But I propose we go beyond the narrow judgment on how banks should be or what they should do, especially in extremely difficult circumstances", a letter signed by ex-Finance minister Daniel Daianu sent to European Commissionaire for competition policies points out.
"The banks with mostly Romanian capital own about 8-9% of the market, of which the state capital represents around 4-5%. How can CEC’s increasing its capital possibly threaten that?" ex-Finance minister Daniel Daianu asked.
Here are some excerpts from the letter Daianu sent Neelie Kroes:
- If the solid banks do not credit the real economy, the recession will deepen and their balance sheets will be worse. Think about the constant and numerous appeals in Mr. Trichet's declarations, each time the European Central Bank injects enormous liquidity to resuscitate the crediting market. The same thing can also be said about the ex French and German government officials.
- I accept the fact that it isn't a "catch 22" situation, that loans should not be blind or lack finality. But when the capital is available for a praising purpose, it is worth thinking in broader terms and help the economy. There are many commercial banks in Romania that would rather finance the budget deficit than credit companies.
- The Small and Medium Enterprises (IMM) sector is endangered because of recession and credit costs, which became prohibitive for many companies. Empowering CEC to play a bigger role in financing the IMM sector is a common sense measure in my view.
- Why should commercial banks be financed from international institutions, (EBRD for example) in order to finance IMMs, while CEC to be prevented to get supplementary capital to expand its activity in this direction?
- There in no breaching of free competition in this case. And by this I do not mean a state aid awarded almost throughout the entire EU, but the stopping of a financial disaster.
- Maybe you're wondering why Romania's Government referred to this capital infusion in a moment when it benefits financial assistance from the international financing institutions and the European Commission. Let's set things in the correct perspective: CEC is in the position to help the real economy, not to finance current budgetary expenses. I hope, honourable Mrs. Commissar that the EC will reconsider its position and find a positive solution for Romania's request.
Romanian PM Emil Boc: We don't wish for CEC's recapitalisation to be state aid, because it will address the deficit
"I want you to discuss the matter again with the Ministry of Finance and The Competition's Council, which have been discussing on how the measure should not be considered state aid with European Commission's representatives and authorised factors ever since February-March, according to what the Government told me. You need to inform the EC when it is state aid. We don't wish CEC's recapitalisation to be considered state aid, because it will address the deficit", PM Emil Boc told Romanian press agency NewsIn on Friday.
Note. HotNews.ro requested on Friday morning, July 3, a series of information related to the subject from the Ministry of Public Finance, but the institution did not respond until the moment of publishing.