Bank crisis in Romania

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Tuesday, 30 May, 2000, 15:52 GMT 16:52 UK Bank crisis in Romania

The Prime Minister of Romania has appealed on national television and radio for calm, in the latest banking crisis to hit the country.

Queues of people have been trying to withdraw funds from Romania's biggest bank, the Commerce Bank, after a spate of anonymous 'phone calls and letters to investors that it's about to collapse.

The Prime Minister, Mugur Isarescu, who's a former central bank governor, said the Commerce Bank was sound, and anyone who wanted could withdraw money.

His appeal followed the suspension of operations earlier this month at a smaller bank, and then at a big investment fund, which led to a senior official being accused of fraud. Correspondents say the latest uncertainty comes in advance of new international loans from the International Monetary Fund, and further privatisations of former state banks.

http://news.bbc.co.uk/hi/english/world/europe/newsid_770000/770058.stm

-- Martin Thompson (mthom1927@aol.com), May 30, 2000

Answers

Sorry about that spider. Must have posted at the same time.

Martin

-- Martin Thompson (mthom1927@aol.com), May 30, 2000.


May 31, 2000 - 09:45 AM

Romanians Block Traffic in Uproar Over Investment Fund By Mihaela Armaselu Associated Press Writer

BUCHAREST, Romania (AP) - Desperate to retrieve money from a high- risk investment fund, hundreds of Romanians blocked traffic Wednesday in the southern city of Ploiesti. Dozens of others who lost money in the fund, which offered interest rates up to 200 percent, converged at the presidential palace in the nation's capital, Bucharest.

President Emil Constantinescu called a meeting of the national defense council to calm panic caused by the rumored failure of the fund and fears the country's biggest bank was near collapse. Romanian officials insist the bank is solvent.

The Romanians outside the presidential palace asked to meet Constantinescu, and two people were invited in to discuss the situation with the secretary of the council, according to spokeswoman Raluca Bob.

Adding to the unease, the International Monetary Fund said it would wait a week to decide whether to extend a loan agreement for $547 million needed by Romania to push through reforms. Approval of the IMF loan will unlock loans from other banks.

In Ploiesti, some 40 miles north of Bucharest, police pushed some 200 people onto the sidewalk to stop them from blocking traffic. The protesters gave a letter to authorities, asking for help to get their funds back, the national radio said.

Small protests also occurred in the cities of Galati, Caras Severin and Arad.

Last week, authorities ordered the private National Fund for Investment to stop operating after thousands of people rushed to withdraw their deposits because of fears the fund was about to go under.

Over 300,000 investors have deposited money, bringing assets to about $150 million. The average monthly salary in Romania is $93.

Panic that the national bank might collapse began Monday after customers received anonymous phone calls, urging them to withdraw their money. Thousands besieged the banks' branches around the country.

Prime Minister Mugur Isarescu pledged Tuesday to pass a law regulating investment funds and punish those who make false statements about the status of financial institutions.

http://ap.tbo.com/ap/breaking/MGI7OYN0X8C.html

-- Martin Thompson (mthom1927@aol.com), May 31, 2000.


Wednesday, 31 May, 2000, 23:39 GMT 00:39 UK Bank crisis 'threat' to Romania

Romanian authorities have tried to play down the fears

Romanian officials have said national security has been threatened by the sudden loss of public confidence in the country's largest state- owned bank, the Commercial Bank. Members of the Supreme Defence Council met to discuss what the government said was an orchestrated conspiracy to undermine Romania's economic and political stability.

No details have been disclosed of the measures taken in response.

Police are already investigating what caused thousands of people to rush to withdraw their savings from the bank.

Several Romanian newspapers have blamed former agents of the Communist-era secret police, the Securitate, for spreading rumours that the bank, which is about to be privatised, was about to collapse.

The BBC's Central Europe reporter, Nick Thorpe, says the affair has come at the worst possible time for Prime Minister Mugur Isarescu.

He has just returned from a trip to the United States, where he'd been trying to inspire international confidence and investment in Romania.

IMF loan

The International Monetary Fund has delayed a decision on a $110m loan release to Romania because of the country's banking problems.

An existing loan, which was due to expire on Wednesday, will be extended by just a week, the IMF said.

A spokesperson said the extension was aimed at giving Romania time to formulate a policy response to its current financial turmoil.

An IMF board meeting is scheduled to take place in the next few days.

Fund closed

Earlier this month, operations stopped at a smaller bank, and then at a big investment fund, Fondul National de Investitii, which led to a senior official being accused of fraud. As money as 300,000 people are believed to have invested in the fund, a private, high-risk plan promising rapid returns.

The crisis at Fondul National de Investitii sparked demonstrations and protests in many areas.

The government has proposed a package of laws to regulate the affairs of the country's many lucrative but risky investment schemes.

Romania remains one of Europe's poorest countries, with an average wage of less than $100 a month.

http://news.bbc.co.uk/hi/english/world/europe/newsid_772000/772225.stm

-- Martin Thompson (mthom1927@aol.com), May 31, 2000.


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