CFO’s Guide to the Romanian
Banking System
Cristi Spulbar, Professor Habilitated
Doctor, PhD, University of Craiova,
Faculty of Economics and Business
Administration, Romania,
cristi_spulbar@yahoo.com.
Dr. Cristi Spulbar is also the executive
director of the Banking and Financial
Research Center (CEBAFI) at the
University of Craiova, Romania.
Ramona Birau, Lecturer, PhD,
Constantin Brancusi University of Targu
Jiu, Faculty of Education, Science, Law
and Public Administration, Romania,
ramona.f.birau@gmail.com.
Dr. Ramona Birau has more than
10 years’ experience as superior
financial inspector at the Regional
Public Finances General Directorate of
Craiova, Romania.
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Cristi Spulbar and Ramona Birau
Abstract: The main purpose of this article is to provide a
useful framework for understanding the Romanian bank-
ing system. Romania is a former communist ­Eastern
European country, which became a full member of the
European Union (EU) on January 1, 2007. The banking
sector is the main pillar supporting the structure of the
Romanian financial system. The growing competition
in the banking market and the massive entry of foreign
capital have made Romania one of the main markets fac-
ing European players.
Keywords: banking management; emerging countries;
global economy; market economy; Romanian banking
system
Introduction
Banks are universal credit institutions that can carry out
any of the activities provided by banking law. Banks,
­Romanian legal persons, are constituted in the ­legal form
of a joint-stock company in accordance with the com-
mercial law and in compliance with the ­provisions of the
banking legislation. As we have already ­mentioned, the
Romanian banking system is a universal one. ­Moreover,
for Romanian credit institutions, there is no element to
specify their form of organization, the structure of the
shareholders, or the nature of their activities, most of
which are organized as banks, although banking law
also allows for the establishment of specialized credit
institutions.
The banking sector is the main component of the
­Romanian financial system. Paradoxically, however, it
has the lowest share of banking sector assets in gross do-
mestic product compared to the other countries in the
region and the EU average. On the other hand, the evolu-
tion of the Romanian banking sector will be affected by
the changes in the international banking and financial
environment. Over the past decade , the financial indus-
try has undergone fundamental and permanent changes.
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 CFO’s Guide to the Romanian Banking System
Prior to the crisis, derivatives, securitiza-
tion, and Basel regulations were considered
to be the basis for a safer financial system.
Currently, the validity of these consider-
ations is no longer certain.
The evolution of the global economy is
closely linked to the existence of a prof-
itable and competitive banking system.
As a result, banks need to develop action
plans to stabilize their activities and build
a more competitive business model. In the
future, innovation and quality services will
be elements that banks will need to take
into account by developing strategies in an
­environment where segmentation will be
increasingly difficult because customers
are better informed and looking for prod-
ucts and services at low prices.
A Brief History of Romanian
Banking System
In the modern era, the first attempts to
create a bank took place at the beginning
of the 19th century. Although there have
been previous concerns in this regard, it
was only in 1856 that the National Bank
of ­Moldova, based in Iași, was established,
which was the first bank to operate in
Romania.
In 1865, a bank was established in
Bucharest, under the name of Romania
­ institutions highlighted the maturity of the
Bank, which initially had the attributes of
a bank of issue and a discounting bank.
Later, the bank lost these privileges and
pursued a purely commercial activity. Dur-
ing the same period, other banks were es-
tablished: Albina Bank (1870)—the first
bank with integral Romanian capital; Rural
Financial Credit (1873); and Aurora Bank.
The most important bank established dur-
ing this period was the National Bank of
Romania (NBR), which, from the organiza-
tional point of view, was designed accord-
ing to the National Bank of Belgium model.
The establishment of the NBR (1880)
has created the premises for the emer-
gence of other banks and the development
of the Romanian banking system. This
bank has been established as an important
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institution designed for crediting the eco-
nomic and commercial activities, discount-
ing bills, and operating with other financial
instruments. After the establishment of the
NBR until the beginning of the First World
War, one can talk about the organization
and consolidation of a banking system in
Romania. The number and importance of
the Romanian banks has increased, from
only 5 existing banks between 1880 and
1890 to nearly 200 banks before the First
World War.
The main feature of the banking sys-
tem was concentration: a couple of power-
ful banks emerged from the need to meet
the increasing demands of credit from big
companies, and they dominated the bank-
ing system. The most famous and powerful
bank of this period was the Marmorosch
Blank Bank with a network of 25 branches
in the country and 4 abroad, which con-
trolled a large number of companies. Be-
fore the First World War, the Romanian
banking system consisted of a central bank
and 196 commercial banks.
After the First World War, several banks
with Romanian or foreign capital were
established in order to capitalize on the
­
economic potential of that time. In 1928,
the number of banks and specialized credit
Romanian banking system, namely, 1,122
banks, compared to 215 banks existing in
1918.The Great Depression (1929 to 1933)
strongly affected the Romanian banking
system, generating numerous bankruptcies
in both small and large banks (­Marmorosch
Blank Bank). After the great crisis, the
number of commercial banks began to de-
cline as a result of a concentration process
through mergers and liquidations.
In 1934, the Law of Banking Commerce
Regulation was enforced, which imposed
more restrictive conditions for the organi-
zation of banks, focusing in particular on
the minimum level of social capital and its
correlation with the volume of deposits.
The number of banks decreased from 1,204
in 1934 to 387 in 1941.The large banks were
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 CFO’s Guide to the Romanian Banking System
those that consolidated their position in
1941, reaching to control over 80 percent of
the Romanian banking system, compared
to 40 percent before the Great Depression
(1929 to 1933).
Until 1946, the Romanian banking sys-
tem had a remarkable development. Banks
had important resources and they func-
tioned according to international standards.
Moreover, the staff was formed of special-
ists prepared under competitive conditions
and there were high standards of profes-
sionalism. The NBR had an important role,
namely, holding the monopoly of emission
of money (money creation) and securing
discount credits in favor of other banks.
After 1946, the banking system was re-
stricted due to the transition to the c­ ommand
economy and the entry of ­Romania into the
Soviet influence zone. On D ­ ecember 28,
1946, the NBR was nationalized, ­becoming
the Bank of the Romanian P ­ eople’s Repub-
lic. By Decree no. 197/1948, it was envis-
aged that all private or state-owned banks
would be liquidated or dissolved (over 350
banks).
Since November 15, 1948, all banking
operations have been concentrated at the
level of a single institutionthe Bank of the
Romanian People’s Republicthat functioned
as a cash collection and control center. This
method of money planned distribution has
allowed the government to set up its own
system of centralized management, super-
vision, and control of the national econ-
omy. The system functioned until 1967,
when the Romanian banking system was
largely organized according to the Soviet
model of a monobank. In the center of the
system was the National Bank, which exer-
cised both bank and issue functions.
Until 1990, the Romanian banking sys-
tem offered a limited number of banking
services and products. Since then, ­Romania
has undergone several changes and the
transition to a market economy, which has
led to the continuous growth of the num-
ber of banks along with the development of
a banking system that responds to market
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demands and ensures the supply of bank-
ing products and services needed for a
market economy.
Strategic Insights on the Evolution
of the Romanian Banking System
After 1990: The Transition Process
from Centrally Planned Economy
to Market Economy
The banking system reform in ­ Romania
started in December 1990, when the
monobank system, specific to the cen-
trally planned economy, was replaced by
a two-tier system: the NBR and the com-
mercial banks. As in most Communist bloc
states, until 1990, the Romanian banking sys-
tem was built resembling, to a large extent,
the S­ oviet model: a central bank also hav-
ing similar functions as a main commercial
bank, being under the strict subordination of
the Ministry of Finance; three so-called spe-
cialized banks (the Romanian Foreign Trade
Bank, the I­nvestment Bank, and the Bank
for ­Agriculture and Food Industry); and a
savings bank (the Romanian C.E.C., which
is the acronym for House of Savings and
Consignments), which had the function of
­attracting the population’s money.
After 1990, by adopting the banking
legislation, the two-tier banking system
was established, with a central bank with
no commercial functions, but only regu-
lation, supervision, control and issuance,
and other traditional functions of a central
bank. Synthesizing at the top of the pyra-
mid was the central bank. On the other
hand, the Romanian banking system has
also incorporated the commercial banks
as independent economic agents, incor-
porated into joint-stock companies based
on companies law, in compliance with the
provisions and strictness of the specificity
of the bank’s activity.
The former specialized banks have been
transformed into joint-stock companies
and have been given the right to carry
out all banking operations without taking
into account the sectorial specialization
they previously had. The monopoly of for-
eign operations, formerly owned by the
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