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Banca Transilvania deal boosts mortgage market in Romania
EBRD extends third credit this year to meet surging demand for mortgages
The European Bank for Reconstruction and Development is making up to €10 million available to Banca Transilvania, one of Romania’s fast-growing local private banks, to fund its mortgage programme. The programme will help meet a surging demand for loans from people wanting to buy their own homes in a country where the mortgage market has been neglected for more than a decade.
The long-term loan to Banca Transilvania is the third mortgage loan extended by the EBRD in Romania this year following similar credits to Banca Comerciala Romana and Banc Post. To date total mortgage financing has reached €80 million, and other mortgage loans to institutions committed to mortgage lending are under consideration.
The latest loan builds on the success of the first two, which have already put home ownership within the reach of around 7,000 individual Romanians in recent months, said Hildegard Gacek, EBRD Director for Romania. We hope this new transaction will also stimulate competition among mortgage lenders and give people access to long-term funds so they can invest in their homes, Ms Gacek added. It is part of a broader effort to prime the economy by broadening the range of financial services offered to Romanian individuals.
While growing rapidly, the mortgage market in Romania today reflects loans worth some €500 million in total (less than 4 per cent of Romanian GDP). Lack of long-term finance has been the main constraint on the market, especially for Romanian banks.
The Banca Transilvania loan is being extended for up to 11 years and will thus provide the long-term funding the client needs to be able to offer a mortgage programme, said Robert Rekkers, Chief Executive Officer of Banca Transilvania. Banca Transilvania holds more than 11 per cent from the Romanian mortgage market and intends to offer individual mortgage loans in either Romanian Lei or hard currency on competitive terms in line with market conditions, Mr Rekkers added.
Banca Transilvania began its operations in 1994 with its headquarters in the north-west town of Cluj-Napoca. Today the bank has 70 branches across the country. Banca Transilvania is listed on the Bucharest Stock Exchange, main shareholders being the EBRD and the Financial Investment Companies (SIFs) Banat-Crisana and Oltenia, as well as many other investors with smaller stakes.
In December 1999, the EBRD granted Banca Transilvania a first $5 million SME Facility under a joint EU-EBRD facility to promote SME growth and development across the 10 countries expected to join the European Union. That first transaction was followed by another four, including the acquisition of a 15 per cent stake in Banca Transilvania.
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