“There is money available for acquisitions of NPLs and the major deals sealed lately are proving it. A government intervention on this market is not necessary, contrary to what some banks say, everything that matters is for banks to see there is a certain price level for such deals. Once a balance is struck between banks’ demands and investors’ offers, things will happen quickly as there’s plenty of cash for such portfolios,” said Ionescu.
Deutsche Bank was part of the consortium that has recently sealed with Austria’s Volksbank a deal for the takeover of a non-performing mortgage portfolio from the Bucharest subsidiary, worth almost half a billion euros, the largest deal of this type announced on the market so far. For this batch of NPLs, the consortium will have to pay around EUR100 million.
Market leaders BCR and BRD also have significant NPL packages for sale as both banks are unfolding extensive portfolio cleaning processes. According to market sources, BCR is trying to sell several corporate loans, while BRD has recently put up for sale a set of SME loans worth over EUR100 million.
In Romania, the rate of bad loans revolves around 24%, quite high compared to the European average, even though provisions have been set up for more than half of them. The crisis onset brought to the surface banks’ bad lending policies during the boom period.
In the first three years of crisis, banks bought time, concealing the poor quality of loans by rescheduling and restructuring payment. In the past two years, under shareholders’ and central bank’s pressure, bankers took bad loans to the surface and started selling them, even though at high discounts.
Deutsche Bank, together with other companies specializing in bad loan takeovers, started eyeing the Romanian market as early as 2009, but Bucharest bankers believed the crisis would be short-lived and would not have to sell all the soured loans.
For almost one decade, Deutsche Bank has had a representative in Bucharest. The German giant bid in 2005 for BCR, Romania’s largest bank, but failed as it offered a too small price. Though it approached the Romanian market again, being in talks with Banca Transilvania at a certain moment, the German giant has not entered Romania’s banking system directly.
Meanwhile, it has opened a technology center in Bucharest, set to create 500 jobs, after getting state aid from the Romanian government.
Deutsche Bank in 1998-2000 period was among the banks that rescued Romania from default.
(English version by Catalina Apostoiu)