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EBRD loans boost home purchases in Romania
Bank extends second credit this year to meet surging demand for mortgages
The European Bank for Reconstruction and Development is making up to €20
million available to Banc Post, one of Romania’s largest private banks, to
fund its forthcoming mortgage programme. The programme will aim to meet a
surging demand for housing loans from individuals wanting to buy their own
homes in a country where the mortgage market is still at a nascent phase.
The long-term loan to Banc Post is the second such credit extended by the EBRD
to Romania’s banking sector this year. In January, the Bank provided a €50
million credit line to Banca Comerciala Romana, mainly for on-lending to
individuals as mortgage loans. Other mortgage loans to other institutions
committed to mortgage lending are under consideration.
This new loan builds on the success of the first deal, which has already put
home ownership within the reach of some 4,500 individual Romanians in the last
few months, said Hildegard Gacek, EBRD Director for Romania. We hope this new
transaction will stimulate competition among mortgage lenders and give
individuals 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.
Mortgage loans granted in Romania so far are estimated at less than €250
million in all – with the lack of long-term finance acting as one of the main
constraints on the market, especially for Romanian banks.
The Banc Post 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 Elena Petculescu, President of Banc Post. Banc Post intends to
offer individual mortgage loans of up to €50,000 in either Romanian Lei or
hard currency on competitive terms in line with market conditions, Mrs
Petculescu added.
Banc Post was formed as a state-owned entity in 1991 and privatised in 1999.
Its two largest shareholders today are Greece’s EFG Eurobank Ergasias and
Portugal’s Banco Portuguese de Investimento. Together with GE Capital, they
hold 62 per cent of the voting power of Banc Post.
In July 1998, the EBRD granted Banc Post a $10 million subordinated
convertible loan. This was followed in May 2002 by a €10 million loan under a
joint EU-EBRD facility to promote SME growth and development across the 10
countries expected to join the European Union; this facility is being
successfully implemented. Banc Post is also an active participant (€10
million) in the EBRD’s Trade Facilitation Programme.
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