By Heiko Hesse. This blog looks at foreign bank deleveraging and examines how Romania’s asset prices have been impacted from European crisis spillovers. Foreign bank deleveraging has been orderly and moderate so far in Romania unlike in some peer countries. Findings from the spillover analysis suggests that Romania’s asset markets tend to co-move more closely with its regional peers but have been also strongly impacted by the Euro area financial crisis. Romania’s bank capitalization has remained strong at 14.7 percent at end-June while prudential provisions covered 98 percent of non-performing loans. In addition, the National Bank of Romania takes a pro-active stance in intensively supervising the financial system.