Romania probes EUR 85m bank fraud

(BUCHAREST) - Two banks operating in Romania have been hit by an 85-million-euro fraud carried out by a criminal group that took out a string of illegal corporate loans its members never repaid, prosecutors said Thursday.

Austrian bank Volksbank and French-Romanian bank BRD confirmed they had been hit by the scheme.

Prosecutors said investigators had carried out 50 searches Thursday in connection with the case.

"The accused made substantial financial gains by illegally obtaining loans from two banks for 35 companies controlled by members of this network of criminals," said the prosecution's organised crime unit in a statement.

Seven bank directors helped the companies obtain loans they did not qualify for, while notaries who were involved in the scheme provided overvalued estimates of the property offered as collateral, the statement said.

Volksbank, which said it had alerted authorities to the fraud in May 2010, estimated its losses at eight million euros.

BRD did not say how much it had lost in the scheme.

The prosecution's organised crime unit cracked a similar case in November that involved high-level Romanian civil servants and the deputy director of BRD, a subsidiary of French bank Societe Generale. The bank lost 22 million euros in that case.