BRD-SocGen budgets 400m euros portfolio for SMEs

BRD-SocGen plans to double its portfolio of loans granted to small and medium-sized enterprises through standardised products this year, to some 400 million euros.
BRD in mid last year launched standardised financing products, the Ristretto and Simplis ranges; the amount of released loans reached 270 million euros by December.
“On the corporate segment, the market had become saturated as early as 2005 and we had to find a new segment,” says Lucian Cojocaru, in charge with the Commercial Department of the BRD-SocGen network.
The bank traditionally focused on medium and large companies, a segment for which it had the know-how and a well-structured offer.
The market of financing for SMEs became crowded all of a sudden in 2006. Banca Transilvania, ranking fifth on the market in terms of assets, in 2005 started launching loans based on standardisation, which ensured a rapid decision.
Last year, several players, including Bancpost, Finansbank and Volksbank, launched products of this type, trying to grab a slice of this market. BRD’s target is to hold a share similar to the ones it owns on other segments, of some 20% of this market.
Cojocaru believes the bank may hit this target given the 400 million-euro financing volume. This would mean the market of financing aimed at SMEs would climb to approximately 2 billion euros.
In Cojocaru’s opinion, personnel specialisation is essential in this business. All BRD branches are mandated to sell loans for SMEs, while in the case of agencies, this is handled by agency coordinators.
He considers getting beyond the 400 million-euro threshold would entail a considerable improvement of distribution, but also taking some higher risks.
However, for 2007, Cojocaru expects the first effects of the risks related to this segment to surface. This will happen as banks were forced to release loans without having a historical database allowing for an adequate risk assessment.
“I do not believe the market will see spectacular growth after 2007(…),” he anticipates. On the other hand, he does not expect to see a significant impact on SMEs in the wake of EU integration: even so, there are significant risks on this segment, because of the high bankruptcy rate among small firms in their first years in business.
The main challenges for 2007 are ensuring customer loyalty and the development of a banking culture.
As regards its offer, BRD will add new products to its already existing ranges.
The bank in the near future plans to launch an electronic banking platform to be positioned between the Internet-banking services for individual customers (BRDnet) and Multix, the service developed for corporate customers, with complex applications.

BRD-SocGen plans
Intends to double the portfolio of loans granted to SMEs through standardised products this year, to some 400m euros
Wants to hold a share similar to the ones owned on other segments, of some 20%,
The main challenges for this year are securing customer loyalty and developing a banking culture
Plans to launch further new products to complement its already existing ranges