THE EUROPEAN BANKING UNION CONFERENCE - A DEBATE FOR A FIRST IN ROMANIA / MIRELA IOVU, VICE-PRESIDENT OF CEC BANK: "The implementation of the Banking Union can negatively affect lending to SMEs"

The implementation of the Banking Union is likely to negatively affect the lending to SMEs, said Mirela Iovu, the vice-president of CEC Bank. There are solutions to mitigate the negative impact, such as increasing the capitalization of banks, covering the risk of lending through government, the use of the support factor, he said.

The official of CEC Bank said: "The application of the Basel III capital requirements leads to the constriction of the loans granted to SMEs, if the banks do not succeed in raising capital (they are force to restrict their reduce their portfolio of risky assets). Still, Basel III allows the use of collateral and collateral substitutes such as government guarantees to reduce the risk ratios associated with the exposure to SMEs. SMES from the European Union depend on financing through loans to a great extent. They are more heavily affected by the application of Basel III then the ones in the US, for example, whose reliance on bank loans is far lower (24% of their financing needs). The SMEs have a crucial role in the economy of the European Union, and restricting their access to loans could affect the economic growth and the workforce employment level".

This reality has caused the European Commission to request the European Banking Authority to review the possibility of lowering the risk ratio of exposures to SMEs, according to the proposal of the European Parliament, Mirela Iovu also said.

The growth of the economy doesn't simply mean the increase of lending, but the existence of an entrepreneurial culture as well, the vice-president of CEC Bank says. Romania lacks entrepreneurial culture, which needs to be developed because it will strengthen the SME sector, according to Mrs. Iovu.

He explained: "The European Union has adopted the 2020 Entrepreneurship program, which needs to be adopted by Romania as well, and which is very important for SMEs. The Banking Union will impact SMEs, unless steps are taken to offset its effects. The main issue is the lack of financing, but the willingness to lend exists, except that there is a shortage of bankable projects. SMEs have a problem when it comes to competitiveness, which needs to be dealt with in the near future".

The vice-president of CEC Bank also said that the bank she represents has increased the financing for SMEs, a sector for which significant amounts could be made available in the coming period. Mirela Iovu considers that a better allocation of the European funds intended for increasing economic competitiveness is necessary.