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First EBRD subordinated facility to Romanian bank
Romania's Banc Post (BP) will be assisted in preparing for its future privatisation by a subordinated convertible loan of US$ 10 million (ECU 9.1 million) from the European Bank for Reconstruction and Development (EBRD). Extended for up to 10 years, the subordinated loan can be converted partially or totally into BP ordinary shares after BP's privatisation.
"The level of Banc Post's share capital is currently its main weakness, and strengthening its capital base is essential in view of its planned business development and future privatisation by the end of 1998," said Charles Frank, the EBRD's Acting President. He continued: "Through this first foreign convertible subordinated loan to a Romanian bank, the EBRD will broaden its involvement in the country's financial sector by proposing a product tailored specifically for a local bank beginning a privatisation process."
"Banc Post is currently at a historic point", said Elena Petculescu, President and Chairman of the Board of BP. "It will be the first state-owned bank in Romania to be privatised and we expect this to be an important event on the capital markets, both in Romania and abroad. Banc Post is in a very strong financial position, which will allow us to attract the best partners interested in working in Romania", she concluded.
As well as satisfying capital adequacy requirements and supporting lending operations, the additional capital resources will be used to develop new products, expand market share, update and improve computer systems, automate tasks currently performed manually, and invest in further renovation and modernisation of the branch network. The project will also contribute to the promotion of a sound private banking system in Romania and will supply medium and long-term resources to the country's small and medium-sized enterprises (SMEs).
Established in 1991 as a fully state-owned joint-stock company, BP began operations in early 1992. It has been licensed by the National Bank of Romania to operate as a postal bank providing banking services to corporate and retail customers. Its corporate clients include "regies autonomes" of national interest (Romanian Post, Rom Telecom, Radio Communications, National Railways Company) as well as an increasing number of private sector SMEs. Corporate loans currently represent 71 per cent of its total portfolio, 43 per cent of which are loans to SMEs. BP now competes with a broad spectrum of Romania's larger banks for lending opportunities and deposits.
As of the end of June 1998, the EBRD's total commitments in Romania had reached ECU 1,257 million.
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