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EBRD and EU support cities and towns across Romania
Bank lends BCR €20 million to help improve municipalities beyond capital
As part of its strategy to support the development of municipalities
country-wide, the EBRD, working with the European Union, is lending Romania’s
largest bank, Banca Comerciala Romana (BCR), €20 million for onlending in
local currency to towns and cities (as well as their utilities) beyond
Bucharest, the capital city.
BCR will use the funds to make loans of up to 15 years to municipalities with
fewer than 150,000 inhabitants in projects that improve, for example, roads,
water supply, sewerage, district heating and urban transport projects.
Hildegard Gacek, EBRD Director for Romania, said municipal lending is growing
but that one of the biggest obstacles is the short length of loan terms
currently offered by most local banks. The EBRD is working with strong local
partners like BCR to provide smaller towns and cities with the longer-term
finance needed to invest in infrastructure to comply with EU and national
regulations, to improve the quality of local public services, and to attract
investment, she said.
The loan is being provided under a €115 million EU/EBRD Municipal Finance
Facility, an initiative of the EBRD and the European Commission to develop and
stimulate commercial bank lending to small and medium-sized municipalities in
the new EU countries plus Bulgaria and Romania. The facility aims to address
the chronic shortage of long-term finance currently available to small cities
and towns. In addition to the EBRD loan to BCR, the EC, through the PHARE
Programme, is providing technical cooperation funds to help kick-start the
project. These funds will be used to promote staff training and help establish
modern credit procedures. Moreover, they will also help the municipalities
prepare projects by paying for experts in this field.
“Apart from a very clear economic justification, this new project with BCR
will have a strong positive social impact on a large number of smaller
municipalities in Romania and ultimately on the livelihoods of the people
living in those municipalities,” said Jonathan Scheele, Head of the Delegation
of the EC to Romania. “This is the first such facility in Romania and we are
looking forward to seeing how it will integrate with and complement the
facility that the EU is making available through the Phare National Programme
and its Economic and Social Cohesion component.”
“BCR is fully dedicated to the municipality sector in Romania, being currently
by far the key financier for this segment of the market, which is one of our
strategic areas,” said Nicolae Danila, CEO of BCR. “BCR has strong expertise
in medium and long-term municipal financing through municipal bonds, direct
lending and managing and co-financing national or international projects,”
said Mr Danila. The bank is the country’s largest financier of municipal loans
with more than €150 million (ROL 6,000 billion) dedicated to local
communities. In order to finance local community projects and to enhance
regional development BCR has extended maturities on its municipal loan for up
to 20 years.
Established in 1990, BCR has over 310 branches and agencies across the country
and more than 4.4 million clients. The EBRD’s relationship with BCR dates to
1996, and both institutions have since worked to support entrepreneurs across
the country. The EBRD has also extended the bank loans to promote mortgage
lending, and to help promote its eventual privatisation. The EBRD acquired a
12.5 per cent, plus one share, stake in BCR late last year.
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