The president of the EBRD, an institution created in the early nineties to help former communist country catch up with the West in terms of development, will arrive in Bucharest on Monday to discuss with Romanian authorities and business partners. He first visited Romania in 2013.
One of Romania’s problems is that it is the European country with the greatest disparity between regions, as the Gross Domestic Product per capita in the richest part of the country, Bucharest-Ilfov is about four times higher than in the poorest region, North-East. Most of the loans, especially the euro-denominated ones, were granted in Bucharest, and lending to SMEs continues to be an issue especially outside the capital city.
EBRD, the largest foreign institutional investor in Romania, has granted funding for the local banks and non-bank financial institutions in the past few years to stimulate lending and the leu-denominated corporate bonds market. Foreign lenders including EBRD have tried to steer funds towards SMEs via banks, offering as good price and maturity terms as possible.
In all, EBRD has invested more than EUR7 billion in Romania in twenty-five years.
The actual structure of its EUR2 billion portfolio in Romania is infrastructure (33%), industry, trade and agribusiness (29%), energy (24%) and financial institutions (13%).
Sir Suma Chakrabarti says that the consolidation of Romania’s banking sector will probably continue and EBRD would be open to explore options to support the potential.
EBRD can continue to support the Romanian banking system with debt and equity.
EBRD has been a major supporter of the Romanian banking sector over the years, having held stake in BCR, BRD, Alpha Bank and Banca Transilvania and participating in the privatizations in the sector. Now EBRD is the largest shareholder of Banca Transilvania, the third leading bank on the market. EBRD sold 86.7 million of its Transilvania shares in a private placement on the Bucharest Stock Exchange in 2015, so it now owns about 11.5% in it.
“Banca Transilvania’s acquisition of Volksbank Romania is a successful example of the expansion of the local banking sector with EBRD support. We are proud about the development of Banca Transilvania and the role we were able to play in the bank as a shareholder. Today it is one of the leading banks in Romania, majority-owned by local investors,” Sir Suma Chakrabarti told ZF.
EBRD reducing its stake was part of the usual portfolio management processes and it remains committed to the bank, the EBRD official said.
“Banca Transilvania’s focus is on SME lending in line with the EBRD’s private sector mandate.”
The EBRD president expects several unsecured bond issues by Romanian banks in 2016.
Moreover, the recently approved legislation for covered bonds is expected to positively impact the development of the local capital market, with the first covered bond transactions most likely being issued in 2017, Sir Suma Chakrabarti said.
“We strongly support a deepening of the local capital market through the development of new instruments.”
(English version by Loredana Fratila-Cristescu)