BUCHAREST -- Five years after revolutions formally ended Communist-style monopolies in Eastern Europe, Romania has laid the beginnings of a capitalist banking system, but the state still dominates the financial scene.


The number of banks that have opened in Romania is far lower than in other ex-Communist countries.


With 25 banks, of which seven are branches of foreign banks, bankers say Romania is "underbanking."


But many preach caution to avoid having a chain of bank failures.


"The size of the Romanian banking system after four years of reform reflects the prudence of the central bank when it grants licenses as we prefer to have strong banks," said Daniel Danianu, the National Bank's chief economist.


Before the 1989 revolution Romania's banking sector comprised the National Bank, or BNR, which then operated as a commercial bank financing enterprises' activity, three specialized banks, a savings institution, and two foreign bank branches.


The Romanian Bank for Foreign Trade, the Romanian Investment Bank, and the Bank for Agriculture and Food Industry were reorganized as stock companies with the state as a sole shareholder. Two have sold some shares.


Early in 1990 Romania allowed the establishment of private banks. Until now 15 new banks have been licensed.


Among these, Bankpost and Eximbank are state-owned. The rest are private, or semi-private and semi-state.


Foreign banks have started to show interest in the Romanian market. Four foreign-based Romanian joint ventures have opened branches in Bucharest.


Last month a new foreign bank arrived on the scene when the BNR granted a license to Internationale Nederlande Groep NV.


But Romania's actual banking industry retains a highly-stratified nature. Concentration in both deposit and loan markets continues to plague the system.


"New small private banks are emerging but the business is still dominated by the four biggest commercial banks," said Radu Negrea, general secretary of the Romanian Banking Association, which groups 21 banks.


The former specialized banks dominate capital and market share. At the end of 1993 they took around 75 percent of the aggregate balance sheet and 85 percent of total credits.


With capital exceeding 60 billion leu ($35.5 million) the state-owned Romanian Bank for Foreign Trade handles more than half of the foreign trade.


Meanwhile, BCR and Agrobank (the ex-Bank for Agriculture and Food Industry) still holds about 75 percent stakes in industry and agriculture.


Romania's Savings Bank, or CEC, with its special advantage of government-guaranteed deposits takes 70 percent of household deposits.


Holding around 8 percent of the total combined assets of the banking system, the CEC is also an important lender on the inter-bank market.


"The 13 newly created private and semi-private banks are expanding their activity very fast," Negrea said.


The leading private-sector banks are the Commercial Bank Ion Tiriac, Mindbank, Bankoop SA, Creditbank, and Dacia Felix based in the city of Cluj.