The new approach!
Cristina Lazarescu
Bank Deposit Guarantee Fund
Romania
High-level Seminar on Challenges for European
Deposit Insurance Systems: Funding, Investment
Practices and Reimbursement.
February 26, 2015, Warsaw, Poland
Looking behind in history … Bonds versus Deposits
Weight of assets class in total assets
100%
Treasury Bonds
90%
Deposits
Other instruments
80%
70%
60%
50%
40%
30%
20%
10%
0%
1997 1998 1999 2000 2001 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
How big are we?
Deposit Guarantee Fund
EUR 930 million
Bank Resolution Fund
EUR 80 million
EUR 1 billion
Exposure coverage ratio:
 eligibile deposits= 2,40%
 covered deposits=3,00%
as of 31.12.2014
What does the current investment policy look like?
Eligible instruments:
 Romanian Government Securities, other sovereign securities.
 Term deposits
 Other financial instruments of the credit institutions.
Investment guidelines:
 min 60% Government Securities
 max 25% deposits and other financial instruments
 min 10% monthly liquidity depending on market conditions
 gradual reduction of the duration
 held-to-maturity(HTM) bond’s portfolio
 local currency
… and the big challenge is…
…by the end of the 2015 reduce weight of deposits out
of total assets (up to 30% each month)!!!
Investments according to the EU Directive
DGSs must be invested in a low-risk and sufficiently diversified manner.
The Investment instruments compliant with Regulation (EU)No. 575/2013 are the
following:

Debt securities which would receive a 0% risk weight under the Standardised Approach for
credit risk.
 Debt securities which would receive a 20% or 50% risk weight under the Standardised
Approach for credit risk and other qualifying items.
 … and other assets that are considered as liquid and safe by the Central Bank
What shall we invest in?
The following assets as far as they comply with Investment Grade
(BBB/Baa3):






Sovereign bonds and Treasury-bills
Debt securities issued by International organizations and development banks
Corporate bonds (Minimum grade : A-/A3)
Bank bonds (Minimum grade : BBB-/Baa3)
Money market instruments
Covered bonds (Minimum grade : BB-/Ba3)
The Romanian financial market is at the early stage.
How do we overcome this ?
Our biggest concerns …. short term liquidity and diversification.
What shall we do?

Reduce tenor in deposits

Acquiring sovereign bonds

Investing in REPO agreements

Investing in foreign denominated bonds

Actively managing the bonds portfolio
Banking environment concern…
Greece- could turn out to be the
European Pandora Box?
Top 3 of Romanian Banking System
Another concern….falling rates
1-5 years Romanian Treasury Bonds
Source: Reuters
Thank you for your
attention!
For further details visit www.fgdb.ro