BCR, the largest creditor of the Romanian economy, is expected to come out of its unprecedented restructuring process and resume its place on the lending market, leading the way for lending in lei amid an interest rate decline.
On a private lending market that fell almost 5% last year, BCR set the tone, proving to be more preoccupied with its internal problems than with taking on risks in its relationship with clients. The bank’s majority shareholder Erste Bank promises 2014 will be the year when the effects of the restructuring program will fully show after the restructuring went on for a year and a half.
The Austrian bank has kept reaffirming its commitment to the Romanian economy, but this remains to be proved through BCR’S lending policy. In the past year and a half the bank has let many clients be tempted by offers from competition, by refusing to extend lending lines, while at the same time keeping away from the refinancing market.
BCR may have left its competitors with room for maneuver, but ultimately the bank’s problems ended up affecting the entire market, since one fifth of banking assets are in BCR’s balance sheets.
So the lending rebound cannot take place without BCR and the bank’s officials say once the reorganization is over, they can get the engines going again.
Small banks, which cannot count on their shareholders’ support, such as Marfin and Millennium, could get sold, continuing the series of transactions that started with RIB, ATE Bank and Nextebank.
The end of 2013 came with a solution to the delicate situation of RIB. The bank was bought by Poland’s Getin Holding – this being the first Polish player to join the Romanian market.
Piraeus also completed the division of ATE Bank, with the latter’s healthy assets being bought by Romanian businessman Dorinel Umbrarescu, who is set to rename it next month as Banca Romana de Credite si Investitii (Romanian Bank for Loans and Investments).
Banking year 2014 kicked off with the announcement of the sale of Nextebank to investment fund Emerging Europe Accession Fund (EEAF). With the transaction pending the approval of central bank BNR, Hungarian MKB manages to exit the Romanian market. MKB failed on the Romanian market six years after becoming a shareholder of the former Romexterra bank, which then became Nextebank.
The series of transactions involving small banks could continue this year: Portuguese group Millennium officially announced it planned to sell Millennnium Bank Romania and already several investors have analyzed the bank, both globally and separate portfolios. Cypriot Marfin Bank has also been seeking to sell its Romanian unit since the financial crisis that hit the island last year. Major bank Volksbank has 2015 as a deadline for the sale of its Romanian unit. It is also important to see what will happen with branches of Greek banks amid pressure to sell them from the European Commission.
The huge burden of the over EUR10 billion of non-performing loans could be solved by creating a secondary market of bad receivables with the help of international financial institutions.
Non-performing loans became the cause of a major gridlock on the banking market in the absence of a secondary market where banks could sell the receivables and assets taken over from clients unable to pay their debts. The EBRD, one of the main external supporters of the Romanian banking market, has started talks with the Romanian central bank over creating such a market and attracting specialized investors, in particular for the selling of real estate assets.
Cleaning up the banking system of non-performing loans is essential for a full rebound of the lending market. Losses have already been largely covered by banks through provisions, but a major problem remains selling assets repossessed from clients in the absence of a specialized market.
(English version by Daniela Stoican)