EBRD and IFC criticise Romania bank tax plans

The news agency Reuters has reported that two of the world’s largest international development banks, the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC, part of the World Bank Group), have formally complained to the Romanian government about proposed new banking sector taxes.

At the end of 2018 the Romanian government issued an emergency ordinance which taxes the assets of all banks in the country when the inter-bank interest rate exceeds two per cent. The move was quickly dubbed “a tax on greed.”

The tax was introduced against the advice of investors and led to a large fall in the value of banking shares on the Bucharest Stock Exchange, as well as placing increased pressure on Romania’s currency, the leu.

An EBRD spokesman said: “We confirm that we sent a letter together with the IFC on February 1, but we are not discussing the contents of our correspondence with the authorities in public and have no further comment at this stage.”

The EBRD owns a number of stakes in Romanian banks, including Banca Transilvania, Romania’s second biggest bank by total assets

“The EBRD has a major problem, because in the case of Banca Transilvania for example, tens if not hundreds of small foreign shareholders bought in based on their credibility.

“When they saw what happened on the stock exchange, they started asking questions of those who promoted the idea that Romania has a stable, responsible, predictable, reasonable legislation.”