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Domenia Credit drops plans to become mortgage bank

Domenia Credit drops plans to become mortgage bank
05.10.2007, 20:34 5

Domenia Credit, a mortgage company that US firm GE Money took over late last year along with Motoractive Leasing and Ralfi, granted loans worth 35m euros in H1, up 250% against the same period in 2006.
In H2, the company plans to grant loans worth 40m euros.
"The increase came amid the introduction of new products, the extension of the loan repayment period (from 20 to 30 years) and a cut in interest rates. The average value of loans surged as customers were able to contract bigger sums," Carmen Retegan, general manager at Domenia Credit, told ZF.
She expects the 250% growth rate to continue during the following period as a result of the expansion of distribution channels.
The company is set to double its network of branches by yearend, from 16 to 30.
This year, Domenia Credit aims to hold a 2% share of the mortgage lending market, after it held a 1.4% market share in 2006 and 1.7% at the end of H1, 2007.
After the takeover by GE Money, the company has dropped the idea of becoming a mortgage bank, a move considered over recent years.
"The logic behind becoming a mortgage bank was to raise money from mortgage bonds. At the moment, we no longer intend to do this, and it is not part of GE Money's strategy. With such a shareholder, raising money is the least of our problems," explained Retegan.
The company could start working with Garanti Bank in the coming period, particularly through shared distribution channels, due to the fact that GE Money is a shareholder in Garanti Turkish group.
In fact, a merger of Domenia, Motoractive, Estima and the domestic arm of Garanti, was announced in April, with the new structure to operate under a banking licence.
"There is an intention to unite all GE Money entities in Romania, but nothing has been done thus far," said Retegan.
Domenia Credit now has 115 employees, with their number due to rise to 150 by yearend, as well as a portfolio of 2,500 customers. Next year, the company could raise its capital by 2.5m dollars to 10m dollars, in order to back up turnover growth.
This year and last year, Domenia Credit posted losses due to investments in development.
"We expect to step into the black by late 2009," added Retegan.
GE Money paid 140m euros to buy Domenia Credit, Motoractive Leasing and Estima Finance. The US company announced it would invest 15m dollars to develop these firms over the coming years, with 10m dollars earmarked for this year.
In late August, the group appointed a new chief of Romanian operations, Ronald Malak.
Starting next year, the group's companies will begin to change names, in order to highlight their new unity under the GE Money brand, with the cost of rebranding estimated at 2-2.5m dollars.

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