Romanian stocks resume fall, central bank warns over deficit

* Romanian bank tax worry returns, bank stocks fall again
* Romanian central bank chief warns over C/A, bank tax
* Other stock indexes in CEE track rise in Asia, Europe

By Sandor Peto
BUDAPEST, Feb 11 (Reuters) - Romanian bank stocks resumed a
fall on Monday as central bank (NBR) governor Mugur Isarescu
clashed with the government over the draft 2019 budget which
includes a new tax on banks.
The plan, which also increased taxes on energy firms to
compensate for rising state spending, was first announced two
months ago and caused a plunge in Romanian asset prices.
Bucharest's main stock index regained some ground
last week amid hopes that talks between the government and the
NBR could make the bank tax less painful.
But the government approved the draft budget on Friday,
geared towards an increase in wages and pensions, projecting 5.5
percent economic growth. Analysts see about 3 percent.
The shares of lenders Banca Transilvania and BRD
Groupe Societe Generale fell 6-7 percent in early
trade to one-week lows ahead of a news conference by Isarescu.
The governor presented the bank's new inflation report, but
also addressed the tax issue, as expected.
The tax on bank assets has complicated monetary policy as it
is linked with interbank interest rates, while the resulting
worries over the business climate knocked the leu to
record lows versus the euro last month.
While Isarescu said the leu's reaction was disproportionate,
he warned that consumption boosted by a strong rise in wages was
not in line with output, and that Romania had a growing current
account deficit problem.
He said the government should not tie the tax to the ROBOR
money market rates.
Data released earlier on Monday showed a 12.5 percent annual
increase in the net average wage in December, and a 17 percent
rise in the trade deficit in 2018 to 15.1 billion euros.

Bucharest's blue-chip stock index was down at 1.8
percent at 1016 GMT, with Banca Transilvania and BRD shares
shedding over 4 percent.
Central Europe's other main indices tracked Asian and
Western European peers higher, led by a 0.8-percent rise in
With the dollar approaching 2-month highs versus the euro,
the forint and the zloty -- often sold when
the greenback is bought -- both weakened, shedding 0.2 and 0.1
percent versus the euro, respectively.
The leu, meanwhile, firmed a shade to 4.7444.
Isarescu said the bank revised its 2019 inflation forecast
to 3 percent from 2.9 percent.
Inflation retreated in the region in the past months and
January figures due this week are not expected to show a big
Romania's government bond yields were mostly lower on Monday
ahead of the auction of a seven-year paper. The 5-year yield was
bid lower by 6 basis points at 4.33 percent.
Latest Previous Daily Change
bid close change in 2019
Czech <EURCZK= 25.8290 25.8300 +0.00% -0.47%
crown >
Hungary <EURHUF= 319.7100 319.2000 -0.16% +0.43%
forint >
Polish <EURPLN= 4.3181 4.3131 -0.12% -0.66%
zloty >
Romanian <EURRON= 4.7444 4.7475 +0.07% -1.91%
leu >
Croatian <EURHRK= 7.4070 7.4045 -0.03% +0.04%
kuna >
Serbian <EURRSD= 118.1300 118.2500 +0.10% +0.14%
dinar >
Note: calculated from 1800 CET

Latest Previous Daily Change
close change in 2019
Prague 1053.09 1046.820 +0.60% +6.74%
Budapest 39972.32 39704.61 +0.67% +2.13%
Warsaw 2373.86 2354.11 +0.84% +4.27%
Bucharest 7418.13 7556.53 -1.83% +0.47%
Ljubljana <.SBITOP 832.52 832.73 -0.03% +3.51%
Zagreb 1759.27 1756.88 +0.14% +0.60%
Belgrade <.BELEX1 709.27 710.40 -0.16% -6.88%
Sofia 567.55 575.17 -1.32% -4.53%
Yield Yield Spread Daily
(bid) change vs Bund change
Czech spread
2-year <CZ2YT=R 1.8650 0.1100 +245bps +11bps
5-year <CZ5YT=R 1.6310 0.0400 +203bps +3bps
10-year <CZ10YT= 1.7000 0.0010 +160bps -2bps
2-year <PL2YT=R 1.5510 -0.0930 +213bps -10bps
5-year <PL5YT=R 2.1800 0.0040 +257bps -1bps
10-year <PL10YT= 2.7260 0.0150 +262bps +0bps
3x6 6x9 9x12 3M
Czech Rep 2.08 2.11 2.13 1.99
Hungary 0.34 0.53 0.68 0.15

Poland 1.73 1.73 1.72 1.72

Note: FRA are for ask prices

(Reporting by Sandor Peto
Editing by Keith Weir)

2019-02-11 13:01:10

© 2019 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.