BOGDAN OLTEANU, BNR: "The banks, a significant part in the restructuring of companies"

• Arin Stănescu: "Banks did not even want to hear about any restructurings over the last two years"

The role of banks in the restructuring of companies is significant, considering that their position among creditors is extremely significant, deputy governor of the NBR, Bogdan Olteanu, said yesterday, in the beginning of the Conference "The role of banks in the restructuring of companies", organized by the BURSA newspaper, with the help of the NBR.

"With a rate of non-performing loans of 17% and a drop in the rate of coverage of the loans with the collateral, due to the depreciation of the assets, the banks have a significant presence among the creditors of companies", he said.

Arin Octav Stănescu, Managing Partner at law firm "Stănescu, Miloş, Dumitru and Associates", has a different opinion, however. He claims that over the last two years, "banks did not even want to hear about any restructurings".

There is no successful restructuring without "fresh money" from the banks, he said: "If you pretend some bad thing doesn't exist, that doesn't mean that it disappears. The banks have done nothing else but roll over the non-performing loans until after the crisis".

Over 150 businesspeople and specialists in areas such as legal services, insolvency stock market, the banking sector, yesterday spoke about the role which the banks play in the process for the restructuring of companies, as well as about the alternative solutions which the companies which are on the brink of insolvency can use.

Some of the methods proposed in that regard, by the attendees include the sale of the business, the debt-to-equity conversion and the options offered by the stock market.

Bogdan Olteanu said that the NBR has asked the auditing of the collaterals which banks request, to see if they cover the loans. If necessary, the Central Bank would require some banks to set up new provisions, he explained.

The main reasons why banks are, in his opinion, so strongly present in the domestic economy, are the low level of the companies' equity, the lack of funding raised from the stock market and the lack of financing through bonds.

In the medium term, local companies need capitalization, because their shareholders' equity represents the buffers needed in harsh times, the deputy governor of the NBR said, who went on to say: "Plenty of companies have been decapitalized, legitimately and legally, by the shareholders, who wanted to use those funds for other purposes. This crisis should represent a lesson for businesspeople, to keep their money in their companies, in the future".

In spite of the important presence of banks in the restructuring of companies, the part of banks is insufficiently developed, as complex restructuring mechanisms do not exist, considers Bogdan Olteanu, who stresses that this kind of devices could be used successfully, in the case of two companies which are the property of the state, namely "Oltchim" and "Hidroelectrica".

As the financing of the economy is low, public statements that discourage lending should be avoided, the deputy governor of the NBR considers.

"Considering that banks are reluctant to lend money, and companies are reluctant to borrow, we should weigh our words very carefully and make sure that they are backed by reality", he said.

Also, according to him, the availability of Romania's financial resources should be rethought. One formula for review would be that, in the 2014-2020, the European funds destined for the private sector be processed through banks, rather than through public institutions, as is happening during the current scheduling period.

Arin Stănescu said that this year, the number of new insolvency filings has increased 20-30% compared to last year.

"There are about 24,000-25,000 new cases on the dockets of the courts, submitted in the first ten months of this year. The end of the current year will take this number to approximately 27,000-28,000 new records, up about 20-30% compared to last year".

Currently, about 6% of the total insolvency records represent restructurings.