The largest ever foreign loan to be taken out by a Romanian body other than by the State is to be obtained by Banca Comerciala Romana (Romanian Commercial Bank) in February. The loan will be for 400 million euros over five years and will come with a four-year grace period and the option to have drawings denominated in US dollars.
The Ministry of Finance will not secure the loan. The record amount comes at a time of record low costs for this type of borrowing - a margin of less than 1% above EURIBOR/LIBOR rates.
Where will all this money go?
"(It will go to) the growth of the bank's balance sheet and to cover the needs related to the new medium and long-term business opportunities for which we have not found funding on the domestic market as yet," Nicolae Danila, BCR's executive chairman, told Ziarul Financiar. The weight of the medium and long-term loans in the bank's portfolio has exceeded 65%, says Danila, meaning that streams of funding with matching maturities are required.
Banca Comerciala Romana (BCR) will be the first to benefit from the improvement of Romania's sovereign rating to investment grade, which will keep borrowing from foreign sources cheaper for Romanian companies.
"As well as the sovereign rating, BCR's rating was also upgraded. At the same time, the reduction in the cost of this syndicated loan compared with that received a year ago is due to EBRD and IFC's entry as shareholders of the bank, and to the good result of the asset portfolio appraisal carried out by the syndication brokers," Danila explained.
The bank took out a different loan in the first half of 2004 for 200 million dollars, which is due in five years; however, the interest rate was higher: LIBOR plus 2%. The loan was arranged by a group of banks comprised of Bank Austria Creditanstalt (BA/CA), Citibank, Erste Bank der Osterreichen Sparkassen and Raiffeisen Zentralbank Osterreich (RZB).
The lead manager team was kept this year, says Danila
BCR's assets came close to 6bn euros at the end of 2004, following around one billion euros' worth of growth since 2003. Preliminary data show the bank's net profits calculated according to international accounting standards rose to around 151 million euros.
Last year witnessed the start of the bank's restructuring and reorganisation plan, as agreed with the new shareholders: EBRD and IFC. Separation of executive and administrative duties was one of the important steps in introducing corporate governance principles.
According to the BCR chairman, the reorganisation of the bank's operations will continue in 2005.
"We are already talking about de-structuring instead of restructuring. We have found solutions whereby revenues can go up faster than costs, so heavy personnel cutting won't be needed," Danila says.
The banks projects include continuing the expansion of the territorial network by a further 50 branches, adding to the 315 existing branches at the end of 2004. At the same time, new machines for banking services will be bought and Internet banking options expanded. BCR has already bought 75 foreign currency exchange machines that allow transactions to be carried out faster and outside business hours.
The new machines will also be used to exchange ROL for RON in the upcoming re-denomination process scheduled to begin on July 1, says Danila.
razvan.voican@zf.ro
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