Bankers are ready to take over equity in companies under restructuring

Several banks are already thinking of taking over stakes in companies under restructuring in exchange for the loans granted, once the NBR (National Bank of Romania) approves the draft regulation that allows the temporary holding of equity as part of assistance operations aimed at debt recovery.
“Since our branch is supervised by the Dutch central bank, we have already considered this solution in Flamingo’s restructuring plan, and suggested it at a certain point, but it never happened. A debt-equity swap can be a good solution because it allows you, as a bank, the possibility to directly influence the client’s restructuring and if they are in a very difficult situation, equity is better than nothing,” says Mișu Negrițoiu, CEO of ING Bank Romania.
Ordinance 99/2006, which regulates the operation of financial institutions, does not, however, allow local banks to have qualifying holdings yet, which would afford them control over entities outside the financial sector.
“The regulation prepared by the NBR is definitely a welcome measure, and there will be banks swapping debt for equity,” said Andrei Cionca, partner with Casa de Insolvență Transilvania (Transilvania Insolvency Firm), judicial administrator of companies such as Flanco, Diverta, and Leonardo.