The growth potential of the mortgage credit in Romania is limited by the long-term financing resources available to banks, the experts of World Bank's investment arm International Finance Corporation (IFC) say.
Still, the high demand will make the mortgage credit portfolio in the Romanian banking system surge from an extremely low level of some 100 million dollars in late 2002 to over one billion dollars in 2005.
Banca Transilvania will soon be able to expand its mortgage credit supply by covering some of its long-term refinancing needs with a number of loans up to 34 million dollars secured by IFC. The bank will therefore be in the position to grant mortgage loans for up to 15 years, while the IFC-supplied loans mature in up to 10 years.
IFC intends to help the bank expand the mortgage credit operations and attain its growth objectives for this segment by using the best practices and standards in the industry, transparency towards clients included.
At the same time, IFC believes that this funding project thereby will stimulate competition among the banks vying for a larger slice of the mortgage credit market and implicitly improve access of banking clients to long-term loans for buying homes.
The explanatory note of the project shows the poor quality of the existing housing stock, the overall shortage of housing and the very high prices on the real estate market compared with how much those that need a home can afford to spend lead to very high demand for mortgage-backed financing products. One of the safe ways to refinance this type of loan is to issue mortgage bonds, which some players might actually do for the first time this year.
Banca Transilvania started granting real estate loans in 2002 and introduced mortgage loans in 2003. IFC says the bank already accounts for a significant share of the mortgage credit market, 12 percent and about half of its portfolio is concentrated in Transilvania.
The bank's goal is to double this share by yearend, but needs long-term funding such as that supplied by IFC to do that.
Banca Transilvania is part of a financial group that includes insurance, leasing, brokerage and consumer finance companies. It is listed on the Bucharest Stock Exchange where it was slightly down on Friday to 5,950 ROL. Its market capitalisation was therefore worth approximately 170 million dollars.
razvan.voican@zf.ro
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