More than 50% of the corporate loans granted in foreign currencies by UniCredit Tiriac since the beginning of the year (accounting for both the former HVB Tiriac and UniCredit Romania) were registered directly abroad, because of the cost of the minimum mandatory reserves, says Rasvan Radu, executive chairman of UniCredit Tiriac.
"All the large volumes are (i.e. registered) abroad and this is especially true for investment loans. This is an apparent effect of NBR's policy to maintain a high cost for foreign currency lending granted by domestic banks, whilst, for the most part, major corporate and multinational clients' exposure is already based abroad," Rasvan Radu told ZIARUL FINANCIAR.
He estimates that, should the NBR maintain the current level of minimum mandatory reserves in foreign currency, almost the entire corporate sector would end up receiving loans in foreign currency from abroad. The local banks arrange and monitor the finance contracts, while the money comes from the parent bank. "We are practically forced to provide our funding from Vienna, to be able to compete with the foreign banks," says Marinel Burduja, first vice-president of Raiffeisen Bank, one of the banks that have largely resorted to outsourcing loans, even some of the loans granted to individual clients.
"We are also considering registering abroad the high-value loans granted to individual customers," says Rasvan Radu. He explains that the NBR does not have any records of funding coming from parent banks, as there are no reporting obligations, so that the statistical data concerning the total share of foreign currency loans present a distorted picture, which is hardly relevant.
"The decline of loans in foreign currencies was artificial," says Rasvan Radu.
A clearer picture of the foreign exposure of the companies in foreign currency can be found in statistics relating to foreign debt, which indicate that non-publicly secured foreign private debt reached 17.6 billion euros at the end of May, an increase of almost 42% compared with May 2006.
Especially over the past year, more and more companies chose to take out loans in foreign currency from banks, which in many cases do not have a local presence, but can offer better costs. This is putting even greater pressure on local banks to co-operate with parent banks in order to arrange competitively priced lines of credit. The local banks should focus on providing local funding for working capital.
Competition is fierce on the segment of real estate funding. For instance, KBC granted loans for four projects of BelROM - the development of retail parks and shopping complexes in Bacau, Sibiu, Targu Mures and Braila, each with a value ranging between 25-40,000,000 euros. At the same time, Piraeus Bank Greece arranged the funding of around 70% of the 35 million-euro value of two residential projects developed by Raptis Kavouras.
Over the last few months, foreign currency lending has accelerated again, encouraged by the fast appreciation of the RON, which reduces the equivalent in RON of the instalments.
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