THE "STRATEGIES FOR THE DEVELOPMENT OF SMES" CONFERENCE / RADU GRAŢIAN GHEŢEA, ARB:  "One in seven companies are insolvent"

One of the realities of the Romanian economy in the period of crisis is that four years ago, one in thirty companies was insolvent, whereas currently one in seven companies are in that situation, said Radu Graţian Gheţea, the president of the Romanian Banking Association (ARB), who stressed that the situation was extremely complex.

"The problem is that these insolvencies are causing a deadlock for all the participants in the economy, because companies aren't paying their suppliers either, not just their bank loans", the ARB official said, who mentioned that, given this situation, resuming talks on the subject of the insolvency of companies should constitute an emergency for the Romanian decision makers, in order for the issue to be resolved as soon as possible, more precisely right now, when the law in question needs to be applied, not after the crisis, when it will no longer be necessary.

Mr. Gheţea said that the corporate insolvencies are no longer such a major issue for banks, as they are cleaning up their balance sheets, but for the overall economy, as they are causing it to go into a deadlock.

The head of the Romanian Banking Association, who is also the president of "CEC Bank", has also mentioned the borrowing by SMEs, which is not at a satisfactory level, saying that guarantee funds must be expanded. He says that currently, only 15% of SMEs resort to borrowing.

"Banks aren't allowed to lend if they do not receive collateral", Mr. Gheţea said, and he added: "It has been proven over time, at least from the banks' point of view, that guarantee funds in which the state is a majority or sole shareholder are not the most flexible or efficient because a state owned company is very different from a private one; it's not about management, it's about the manner in which the company is treated in the legislation. A state owned company needs to answer for its operations, so this leads to inherent deadlocks that do not occur in the case of private funds. Given these circumstances, Romania needs to bolster private guarantee funds".

The RBA official mentioned: "At the Association, we have discussed the possibility of banks participating in the creation of a guarantee fund that would also have foreign involvement - the European Bank for Reconstruction and Development (EBRD), the European Bank for Investments (EIB), the Bank for Development of the Council of Europe or the IFC. Thus, the process of guaranteeing loans would see a new boost and lending would rise more steeply".

As CEO of CEC Bank, Mr. Gheţea said that 42% of the loan portfolio of that institution is allocated to SMEs, and in the first ten months of the current year, the volume of the loans granted by CEC to SMEs has increased 13%, compared to the 8% increase in the total loan volume.