CEC and Eximbank boast two-digit growth on a market without competition

CEC Bank and Eximbank, the two banks that the government early this year announced it wanted to use to give a boost to private sector lending, are unable to use the funds they have available for loans to their clients, but continue to request additional capital.
CEC Bank is now in the position of losing at least part of 68.5 million-euro cap assigned as part of the “First Home” governmental programme, after having granted fewer than 100 credits, out of the total of more than 4,700 applications approved by the Guarantee Fund.
CEC granted only loans in RON.
“We will not fight with 18 banks that have very cheap euro resources,” says Radu Gratian Ghetea, CEC Bank chairman, explaining the choice to focus on lending in RON. Still, the wide gap between interests on RON and interests on euro cause the instalment of a mortgage loan sold by CEC through the “First Home” programme to be almost double the instalment on a loan of similar value, taken out in euros from competitor banks. The bank is now preparing a better RON loan offer.
CEC Bank’s boss says that the bank has found other avenues of growth, however, that is financing for small and medium-sized companies and agricultural businesses.
“We granted loans to SMEs, we posted a 36.9% growth in volume since the beginning of the year. We have other niches. Although we used to be a bank for the people at some point, we are now a bank for SMEs.”
Eximbank has increased its total exposure in form of financing and guarantees granted to its clients by 22% to approximately one billion RON (237 million euros) since the beginning of the year. Although Eximbank has a 60 million-euro cap available for guarantees for loans taken by companies, it did not sign any contract from June through early October.
On the other hand, the government has been unable to persuade the European Commission so far that the increase in the capital of the two banks is needed to sustain lending to businesses in the private sector, which are dying out because of the lack of financing. In the meantime, governments in Western Europe have injected billions of euros in their financial systems, to save the big banks from imminent bankruptcies.