Verida Credit: Exotic currencies are too risky

Verida Credit, a company set to specialise in mortgage lending, created by investment funds ABN Amro, Old Lane, and Rubikon Partners, will enter the market in two weeks and by September will have 9 products on offer.
“Our plan is to start with home equity loans and then expand our licence to housing loans, and by September we’ll have an entire portfolio of mortgage products. Overall, we’ll have nine products,” states Carmen Retegan, CEO of Verida Credit.
Verida Credit will target individuals and sole traders, while loans will only be released in RON and euros.
“Our target is quite broad (…) Our loans only will be RON and euro-denominated ones, we won’t grant any franc-denominated loans because they are too risky due to foreign exchange volatility and the fact that the population’s incomes are not related to francs,” explains Retegan.
This year, the company will only accept houses as collateral, but will include land as collateral in the coming years, depending on its prices. The company is now setting product costs, which Retegan says will be in line with the market average.
“Looking at the market, more or less all mortgage lending institutions have similar interest rates of 9.5-10% per annum. However, this is the level of interest before banks announced hikes, which I believe will revolve around 1-3%. We’ll see how the market evolves and depending on this we’ll set costs, which have to reflect the assumed risks,” says Retegan.
She states Verida will not resort to client luring strategies such as a massive reduction in interests over a certain period.
To sell its products, Verida will employ financial consultants, but will also work with brokers. By late 2009, it will have 100 consultants, out of a total number of 150 employees. At the same time, Verida will open three subsidiaries this year, which includes one in Bucharest and 2 in the country and early next year will set up a further 4 branches.
She believes Verida entered the market at the right time despite the fact that bankers’ adopted tighter lending conditions and the number of deals with houses in the first half of this year fell. “I don’t believe there are elements that could slow down the mortgage market. There is indeed a fallout from the international crisis, but the Romanian market is in a completely different stage of development (…),” states Retegan.
The mortgage market is expected to slow down to 10% in 3-5 years, after it climbed by 75% in 2007, considers Retegan. She says Verida will compete with banks, rather than with companies that specialise in mortgage lending, because their number is very small.
The main financing source of Verida Credit is ABN Amro Netherlands, which owns over 30% in IpoCredit Holding, owner of Verida Credit.

Verida Credit
Will enter the market in two weeks and by September will have 9 products on offer
Targets individuals and sole traders, while loans will only be granted in RON and euros
To sell its products, Verida will employ financial consultants, but will also work with brokers
Will open 3 subsidiaries this year and 4 in early next year
Will embark on an advertising campaign starting in autumn