EnglishRomanian-based commercial bank BancPost has signed an 80 million EUR financing agreement with the European Investment Bank (BEI) for financing small- and medium-sized enterprises and is having preliminary negotiations with the European Bank for Reconstruction and Development (EBRD) for a similar agreement worth 50 million EUR.
According to BancPost President Mihai Bogza, the bank would further pursue such negotiations to the extent of the real prospects of the SME sector, which has been the most severely affected by the ongoing economic crisis. "If we see a recovery of bankable demand for SME lending, we will continue," Bogza said.
"In order to be eligible for a loan, not only must the small- or medium-sized enterprise prove that they truly need it, but they also have to have a business with the potential to ensure repayment. The lending decision is based not only on the bank"s interest to recover the loan as scheduled, but also on the customer"s interest, because it will be their collateral that will be foreclosed upon in case of default. This is what we mean when we speak about a bankable demand for loans. As a consequence of the crisis, this has declined severely in Romania. A sustainable increase in bankable demand will only occur when the economic environment improves significantly and we all are hoping that it will not take too long," BancPost President Mihai Bogza added.
The bank is actively pursuing a diminution in the cost of resources, also thorough a substitution of the more expensive deposits with cheaper funding, such as that provided by international financial institutions, Bogza explained.
The credit risk can no longer be measures because of the uncertainties on the market, while the cost of resources is much higher now than it was before the crisis, forcing the bank to be very conservative about issuing new loans, Bogza added.
In this respect, the bank differentiates between existing customers, to whom the bank has not transferred the entire increase in the cost of resources, and new customers, to whom the current cost of the loan can be, in many cases, much more than what they can afford to pay.
For the time being, loans to small- and medium-sized enterprises account for approximately 30% of BancPost"s loan portfolio.
• EFG Leasing Borrows 60 Mio EUR From EIB
The European Investment Bank (EIB) has granted a 60 million EUR to EFG Leasing, according to a press release. The loan will support smaller projects in Romania in the areas of industry, services including tourism, agriculture, health, energy and environmental protection, usually promoted by SMEs, with up to 30% also being available to finance the projects of mid-cap enterprises and public sector entities. This is the EIB"s third operation in Romania with a financial institution operating in the leasing sector.
In the framework of this loan, EFG Leasing Romania will also benefit from the SME Finance Facility, a special grant scheme promoted by the European Commission focused on further developing strong and competitive small and medium-sized enterprises in Romania, providing the EIB"s partner financial institutions with incentives to lend to SMEs.
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