Romania's banks lose $1.5bn to insolvent companies

Banks in Romania have lost 5.2 billion lei (1.56 billion U.S. dollars) due to loans made to companies declared insolvent in the first three quarters in 2013, Risk Assessment Company Coface representatives told a news conference on Tuesday. "In the first nine months of 2013, as many as 18,321 companies became insolvent and accrued liabilities uncovered by the book value of assets are 13 billion lei compared to 8.5 billion lei (2.56 billion dollars) in the same period last year," said Constantin Coman, country manager of Coface Romania. "About 40 percent of the amount will be losses in creditor banks' balance sheets, already causing the increase in the non-performing loan ratio for companies by 4.5 percentage points," said Coman. Losses incurred by the private sector and the state will be at 7.8 billion lei or 60 percent of the total. Corporate insolvencies in the first nine months led to the loss of 77,000 jobs, down 1.8 percent compared to the same period in 2012 but 53 percent more than in 2011. About 60 percent of job losses are concentrated in five sectors, namely textiles, wearing apparel and footwear, construction, chemical manufacturing, metallurgy and other personal service activities.