BCR Finance, registered in Amsterdam, has been licensed by Luxembourg market supervisory authorities to start issuing bonds to cover BCR's foreign currency needs.

BCR, the biggest domestic bank, is getting ready to tap into the international capital market in a bid to raise as much as 3bn euros, after its parent company, Erste Group, has provided it with the foreign currency amounts it needed during the three years since privatisation.

In spring, BCR set up a specialised vehicle registered in the Netherlands, BCR Finance, to raise financing particularly from foreign markets, and the Luxembourg financial sector supervisory authorities have recently approved the prospectus through which this entity is to issue bonds with various structures and maturities up to 3bn euros.

The dealer and arranger for the bond issues will be Erste Group, while the Luxembourg subsidiary of BNP Paribas Securities has been appointed as broker on international markets.

Why this change in the way BCR secures its foreign currency needs?

Erste Group representatives say the parent company has pledged to support its subsidiaries, but at a cost that should reflect the liquidity premium and country risk. That is, since the crisis has deepened, BCR had to pay a bigger price for the foreign currency provided by Erste on the rising country risk premium for Romania.

The Austrians say BCR could get financing at more favourable costs from alternative sources, such as the bonds the bank is to issue on the Luxembourg market and even on the Bucharest Stock Exchange for RON resources.

As almost 55% of loans released by BCR are foreign currency ones (mainly in euros), foreign currency time deposits cannot cover the entire financing need, particularly on the corporate segment, as the basic strategy of Erste group requires. Only 33% of deposits attracted by BCR are denomin