The incapability of the small and medium-sized enterprises to get banking or governmental loans, largely caused by the lack of managerial competencies and long-term development plans will cause 50% of the companies in this sector to go bankrupt in the first two years after the accession to the EU.
This is one of the conclusions the guests at the “Money has become cheap. Do companies have investment projects?” seminar organised by ZIARUL FINANCIAR arrived at.
“There will be a one or two-year period of confusion when many of the Romanian SMEs will die,” stated Aurel Ilin, the head of the credit analysis department of BRD-Groupe Societe Generale.
The domestic SMEs are not ready to join the EU, the attendees at the seminar feel.
Unless they come up with long-term strategies, the Romanian SMEs will lose out against those coming from abroad. Approximately 70% of the total number of SMEs will be made up of foreign companies, after accession, as specified by Mugur Stet, National Bank of Romania”s spokesman.
He explained that, macroeconomically, Romania would stand to gain after accession, because 60% of the domestic SMEs would vanish, but there would the 70% coming from abroad.
Florea Parvu, vice-chairman of the National Council of Private Small and Medium-Sized Enterprises (CNIPMMR) believes that the essential requirements for a small or medium-sized company to survive are the capitalisation and the stability of its position on the market.
“The domestic capital will have a hard time entering the market because of the foreign capital,” Parvu commented.
The SMEs, however, need substantial financial resources to make investments in development, and many such companies are having trouble gaining access to banking or governmental loans.
“In February 2005, they asked banks to cut interests. This happened at the end of 2005,” stated vice-premier George Copos, who attended the event. At present, the average interest on the banking market for loans taken out by legal entities is 10%, but the terms of the loans are negotiated with each company separately.
“The interest in the Romanian banking system is now normal for the level of development the economy has attained,” NBR”s spokesman stated.
“In terms of average, the spread between the interest on deposits and the interest on loans is 4.4% at BRD. We”ve had spreads as high as 10% before,” said Aurel Ilin.
“I believe banks should again become good partners for investors,” added Copos. After all, banks are now paying more and more attention to the SME segment, after having got the retail and corporate segment covered. A survey by BRD shows that approximately 60% of the SMEs borrow money from shareholders, 10% use their own resources and only 15% turn to banks.
“I am glad to see this 15% because it exposes the opportunities that SMEs provide to banks. We can gain the 60% that are currently getting funding from shareholders,” commented Aurel Ilin. mihaela.popescu@zf.ro