The Government project aiming to build homes for the young people and gymnasiums is not viable in terms of recouping the investment. This reality is substantiated by the fact that none of the real commercial banks has a part in the financing arrangements. Although some of these banks were contacted by the Executive, none of them accepted to play a part in the project.
One of the unknown episodes of the CEC (Savings Bank)-National Housing Agency (ANL)-National Investment Company (CNI) deal was the government's attempt at getting the money from the private banks operating on the Romanian market. The Government did not have the necessary money and could not just take it out of the state budget, either.
Although the bankers have been reluctant to talk about this, several big banks that had funded state projects before were contacted by the Ministry of Finances, in the bid to get them to participate in financing the Government's social project.
However, the programme's features did not allow for any of the banks to get involved, as it would have led them to breach the internal exposure norms. First of all, the project does not benefit from state guarantees that could be considered, as the Ministry of Finances can only provide a so-called "comfort letter." In fact, the ministry has pledged to restrict the sovereign guarantees.
Also, one of the main reasons why the banks vetoed the project is its incapacity to generate a cash flow able to help them recoup the money. The norms applied by the foreign banks do not allow them to consider budget revenues as collaterals under such a financing project.
Consequently, although another deal with the State would have been appealing enough, the bankers eventually said no. And their verdict says it all.
"Last fall, several banks, including HVB Bank, were asked whether they were interested to participate in financing the projects with ANL and CNI. Unfortunately, because of the lack of a reimbursement guarantee but also due to problems related to the project structure, including the land's legal status, all banks declined the invitation," Dan Pascariu, president of HVB told Ziarul Financiar, confirming the information available in the banking circles.
Under the circumstances, the Government was forced to resort to the Savings Bank, an institution enjoying a very special status, as the Ministry of Finances holds a stake in the bank. In fact, this status has triggered harsh criticism from the European Union officials, who have said the CEC is not working as a genuine commercial bank, since it holds a privileged position.
However, the National Bank of Romania (NBR) is not saying anything about CEC's involvement in the ANL/CNI project.
"CEC has a commercial bank licence which was granted by NBR, which means that it has to work as such. The central bank's silence is surprising, because, according to the law, CEC cannot be exempted from the rules that are applied to the entire system. If CEC's working as a true commercial bank is not desired, then this should be very clearly stated because such an ambiguous status should not be maintained. I am amazed at how lightly this issue is being approached and at the attempt to downplay its seriousness," says Steven van Groningen, president of Raiffeisen Bank.
razvan.voican@zf.ro ; oana.nuta@zf.ro
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