Romania

In May 2005, Convergence was invited by the Romanian Deposit Guarantee Fund (RDGF) management to use analytics and an open consultative method to address the adequacy of the size of the fund and the related issue of the banks’ contribution.

Given the complexity of the assignment, Convergence engaged in consultations on the basis of an initial issues note which, a few months later, was expanded into preliminary findings. In parallel, Convergence retained Marko Škreb, the former Governor of Croatian National Bank, to act as a peer reviewer throughout the process. Early and preliminary feedback was useful to determine the future course of action.

To provide the Romania financial community access to best European knowledge on deposit insurance issues, Convergence established a partnership with the Italian Deposit Insurance Fund (FITD). FITD arranged for Convergence to seek feedback on the Romania project in the October 2005 meeting of the European Forum of Deposit Insurers (EFDI) in Warsaw. A similar presentation was made in November 2005 to a group of international banks with significant Central and Southern Europe presence -- in the context of the Convergence Group.

FITD and Convergence discussed their joint analyses1 in a technical seminar with Romanian participants that proved essential to build common understanding on the institutional, market and financial considerations of a potentially revised RDGF financial policy. Shortly afterwards, Convergence further tested the analytical framework in an important EFDI regional meeting in Sarajevo.

Six months into the assignment, Convergence and FITD delivered their joint final conclusions (technical annex) to RDGF management with recommendations to adopt a new financial policy with a hybrid risk-based ex ante/ex-post financing mechanism to support an almost doubling of the fund’s size to support depositors’ confidence. The assignment concluded with a presentation to the RDGF Board, the issue of the final Škreb independent opinion, and an intervention at the Symposium marking the RDGF’s 10th Anniversary on March 2, 2006. In March 2006, the Romanian Parliament had enacted a series of law amendments to reflect the substance of the study recommendations.

To share the lessons learnt in this project in the region, Convergence partnered with the Bank of Albania and the Albanian Deposit Insurance Agency to organize a regional technical seminar on financial policy issues for transition countries on May 30, 2006. More than 100 participants attended the event that featured important presentations from international experts. Following are pictures taken at this event: a) Opening Panel with, from left to right, Djurdjica Ognjenovic, Avv. Roberto Moretti, Governor Ardian Fullani, Silvana Sejko, Prof. De Lisa; b) Governor Ardian Fullani, c) Organizers with, left to right, Luigi Passamonti, Avv. Roberto Moretti and Governor Ardian Fullani, d) Other Speakers with, left to right, Ina Kraja, Velimir Sonje, Marko Skreb, Luigi Passamonti, Allan Popoff and Alexandru Matei. The essence of the lessons learnt was captured in a World Bank technical note.

This decision followed a seminar In February 2006 Press Release, hosted by the Board of the Association of Romanian Banks with National Bank of Romania participation, where Prof. Cesarini discussed his Report on the role of the Italian Banking Association in promoting financial development in Italy. During this seminar, Convergence Program tabled a proposal to support ARB’s stepped-up involvement in analytical activities.

1) Potential market sensitivity reasons suggested to treat 2003-2004 project data as confidential during the analysis and policy design phases