Annals of “Dunarea de Jos” University of Galati Fascicle I – 2010. Economics and Applied Informatics. Years XVI – n o 2 - ISSN 1584-0409 177 Risk Analysis of the Romanian Banking System – an Aggregated Balance Sheet Approach Eugen MITRICĂ The Bucharest Academy of Economic Studies eugen_mitrica@yahoo.com Liliana MOGA Dunarea de Jos University of Galati liliana.moga@gmail.com Andrei STĂNCULESCU The Bucharest Academy of Economic Studies stanculescuandrei@yahoo.com Abstract The paper presents a risk analysis for the current Romanian banking system. The analysis is conducted from the point of view of prudential rules and also from the point of view of Romanian banking system’s exposure to foreign funds, considering the consequences of these features, concerning the soundness and reliability of the banking system. The analysis found a manageable risk level, apparently, although during 2009 and 2010 the expansion of risk indicators was accelerated, but finally, in the late 2010, there are some signs of stabilization. The exposure of Romanian banking system to foreign funds was another important risk source. The exposure to foreign funds had an important decrease during 2009, but in 2010 it seems to stabilize. Keywords: prudential rules, exposure, Basel accords, capital adequacy, Romanian banking system JEL Code: G21, E59 1. Introduction Starting with the last months of 2008, the issues of risk and exposure became very important for Romanian banking system. In the first stage, the international crisis put pressure on financial resources at the level of the international banks and almost instantly over the entire Romanian banking system, because the most of Romanian banks are branches of international banks. Some companies, especially exporters and importers were affected immediately after, by high cuts in their incomes. Then, more or less gradually, the entire economy decreased under the effect of incomes’ reduction and increasingly lower demand. Because the roots of the crisis were in the financial field, even Romanian banking system was under strong international influence, it is important to evaluate its current soundness and also its exposure to foreign funds. On the other hand, this study is significant from the point of view of predisposal of the Romanian banking system to the modern technologies and modern banking procedures. For the purpose of large scale implementation of banking efficient solutions, the reliability of the banking system is crucial. The credibility is an issue that results from the features of the banking system and directly influences its development. The analysis is focused on the evolution of some key prudential indicators. These risk indicators are mainly provided by National Bank of Romania (N.B.R.) and those which are not provided by N.B.R. are derived from banking system’s aggregate balance sheet. The most important between these key indicators is the index of capital adequacy (solvency ratio), which is under the classical constraint of minimum 8%.