Romanian c-bank says 18% of corporate loans are to firms now under insolvency

By bne IntelliNews October 7, 2013

Some RON 23.6bn [EUR 5.3bn], or 18% of the Romanian corporate loans, are owed to domestic banks by firms currently under insolvency procedures, the central bank’s director for legal affairs, Constantin Paunescu, announced as quoted by Ziarul Financiar daily. Most of the collaterals for these bad loans are real estate properties [not liquid].

An increasing number of firms relies on insolvency procedure, central bank data revealed. The companies that went insolvent in 2012 were employing 20% more workforce than those that went insolvent in 2011, their assets are double and their bank debts are significantly higher - RON 7.9bn compared to RON 4.4bn a year earlier.

The statement is made in the context of a controversial amendment operated by the government to the insolvency procedures. Public criticism is based on tighter terms set for insolvency procedures that might in principle result in a larger share of firms not managing to recover but rather go into a more radical stage of bankruptcy.

What central bank says is that banks lose too much money from the lengthy insolvency procedures. Indeed similar complaints were frequently publicly expressed by companies complaining of their partners filing for insolvency solely for the purpose of avoiding payments. PM Victor Ponta also mentioned the insolvency procedures as a key reason for this year's weak budget revenue.

Related Articles

Owner of Romania’s Dedeman reportedly close to signing largest ever deal in the Romanian office segment

Dragos Paval, owner of Romania’s biggest DIY retailer Dedeman, is reportedly close to signing an agreement with Africa Israel Investments for the acquisition of an office building project in ... more

RBI doubles net profit y/y in Q1 as Russian business recovers

Raiffeisen Bank International (RBI), the second largest bank operating across Central and Eastern Europe by assets, reported that net profit almost doubled year-on-year to €220mn in the first ... more

Shares of Digi Communications drop as CEO of Romanian subsidiary is investigated for corruption

Shares in Digi Communications closed the day 4.1% down at RON39.5 (€0.86) per share on the Bucharest Stock Exchange on May 17, the day after they were floated. The company was hit by a ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss