BANKERS AND EMIL BOC FACE-OFF ING leaves "First Home" program, announces launch of similar loan

• Banks to sign new convention for the "First Home" program

Ana Săbiescu

Banks which applied for the "First Home" program will sign, at the end of next week, a new convention with the National Guarantee Fund for SMEs, after having cleared all the details on the execution of the guarantee for bad loans in a meeting they had yesterday with Prime Minister Emil Boc.

However, ING Bank, one of the 20 banks that had initially joined the program, announced that it would leave the program and launch a similar type of loan instead, with interest rates matching those of the program.

"After reviewing the Guarantee Convention, for the program, that we received from the National Credit Guarantee Fund for SMEs, ING has decided to withdraw from the "First Home" program because the procedure for receiving the guarantee would generate additional administrative expenses, which do not fit into the distribution model of ING Bank", officials of the bank said.

ING Bank will launch its counter offer for the Romanian market this summer. Albert Roggemans, CEO ING Retail Banking, said: "Applications for our new loan will be very quickly processed, and there will be no restriction on using that loan to buy a home, i.e. customers will be able to use it to buy a second home should they wish to do so. This loan will support the initiative and the notable effort of the government led by Emil Boc to stimulate the real estate sector".

Prime Minister Emil Boc yesterday met with officials of the eight banks, including BCR, Raiffeisen Bank or Bancpost, which refused to sign the initial version of the guarantee convention, alleging it contained "weird" clauses and that it did not clearly specify how the guarantee would be implemented.

Martin Skopek, vice-president of BCR"s Retail division, said: "The meeting was very productive. All the parties involved were able to express their opinions and to clarify all aspects. There are some details that are not yet completed, but I have confidence that it is just a matter of time until the "First Home" program will be fully functional."

The revisions made to the first draft of the guarantee convention will be applicable for the contracts already signed by the 12 banks in the beginning of this month, by signing addendums.

According to NewsIn, Răzvan Munteanu, vice-president of Raiffeisen Bank, had the following to say after meeting with the Prime Minister: "Several legal issues which are of little interest to end users, were clarified, and all the issues that impeded the launch of the program were solved. We have reached an agreement for each point on the agenda, and what"s left is to have legal counsels find the legal formulas to implement all these aspects".

The new guarantee convention provides that the mortgage on the properties sold as part of the "First Home" program, will be a legal instead of a conventional one, as provided in the initial draft.

Conventional mortgages are set by an agreement between the parties, and it would allow banks to get their money faster from the guarantee fund in case of foreclosure. In turn, legal mortgages require going to court, thus making it harder for banks to get their money back.

The "First Home" program began early this month, but some of the 20 banks which joined it at the end of June had a head start over the other banks that have not yet decided to join the convention or which aren"t happy with its terms.

Bankers have oversubscribed the offer of the Government for the "First Home" program by almost 50%, with a total of EUR 1.457 billion available for lending, as the Romanian government announced it would put up EUR 1 billion to guarantee loans taken out by the population. As a result, the state capped some of the offers received from banks in order to stay within the EUR 1 billion limit.

20 banks applied for the "First Home" program, submitting their offers on their maximum amounts they intend to allocate for loans granted as part of the program and their interest rates: BCR, BRD - Société Générale, Raiffeisen Bank, CEC Bank, Alpha Bank, Volksbank, Banca Transilvania, Bancpost, Banca Românească, Piraeus Bank, Bank Leumi, ATEbank, Intesa Sanpaolo Bank, Credit Europe Bank, OTP Bank, UniCredit Ţiriac Bank, ING Bank, Emporiki, Millennium Bank and Garanti Bank.