He also raised another issue – the absence of a major bank with Romanian shareholders to lend to the Romanian economy during these difficult times – which leaves the Government without much leverage.
On the major real estate ads websites the number of homes put up for sale by banks has reached 3,000-4,000 and this year it could exceed 10,000 units given that the rate of non-performing loans has exceeded 20%. On the other hand the economy remains frozen and the volume of loans granted to companies and to individuals continues to decline.
“We have fallen from one extreme to the other: while until 2008 – not just in Romania, but everywhere, in America, Europe – loans were granted to anyone and very easily, after the financial crisis we have fallen to the other extreme, where it is the most difficult thing in the world for anyone to give you a loan. And the thing the bank does very quickly is to foreclose on you. Banks have turned into real estate agencies, agencies that sell cars, that sell your assets. But when you go and ask for a loan, the situation is terrible,” Victor Ponta said on Thursday.
In the banking world the subject of foreclosed properties remains a delicate one and is usually discussed behind closed doors, despite the fact that banks have had to allocate significant resources to manage these portfolios, which they are not willing to get rid of very quickly.
In the “goods under foreclosure” section of UniCredit Tiriac Bank there are almost 1,900 ads, with another 80-90 properties included in the basket of active auctions. Raiffeisen has 446 apartments and 172 houses for sale on it website, while BCR has put up for sale 43 apartments and 18 houses in Bucharest alone. Bank representatives had not specified the size of this portfolio by deadline, as this kind of information tends to be kept secret.
The administrators of the imobiliare.ro real estate ads website say they have reached a portfolio of 3,500 ads for homes and land put up for sale by banks and that they want to reach 10,000 offers by the end of the year.
“There are already several investors knocking on banks’ doors, wishing to buy portfolios for 20-30% of the price, but I have not heard of such transactions being concluded so far because banks would have to take losses. They ought to focus more on selling to the end user, where they have to work on advertising and on the sales mechanism,” says Victor Patesan, product manager for auctions and foreclosure sales at imobiliare.ro. He previously worked for eight years in banks such as UniCredit, Volkbank and Finansbank.
If you compare the prices of homes that banks put up for sale with the prices of the other properties on a real estate ad website, banks’ homes are similarly-priced at the first call auction, so the bargains can appear only with the second call auction. At this second stage the price is cut by 25%. A property can be sold even for less than that, for the best bidding price, if there are at least two bidders and if the bank agrees to the price. But most often the potential buyers cannot do a viewing of the home before the auctions and few clients are willing to take the risk of buying without seeing.
However, there have been bargain hunters, with some bank auctions having up to 8-10 bidders, as banks’ ads have started to be mixed among offers from individuals and from real estate agencies.
(English version by Daniela Stoican)