• RETAIL
The year 2002 was the competition year amongst the commercial banks in Romania as regards the retail segment, which has acknowledged a growing demand coming especially from individuals interested in taking credits for dwellings, cars or purchase of other goods, leading to an increase by almost 30%of the non-governmental credits, in real terms.
The housing loans have expanded mostly due to the emergence of regulations regarding mortgaging credits, as represented by the Law no. 190/1999 with amendments, which illuminated the conditions imposed for the set up of mortgaging credits companies, and also due to the emergence of the Law 541/2002 on the savings and crediting in a collective system of the housing domain.
Launching various forms of financing, the development of credit cards, the reconsideration by each bank of the branches net, the initiation of Internet- banking and mobile-banking, all favored the expansion and progress of commercial banks in Romania, over the last period. Authorizing of banks
Banking companies that are Romanian legal entities may only function on the basis of an authorization issued by the NBR. Romanian legal entities in this case are deemed to be banks with headquarters in Romania, as well as domestic subsidiaries of such banks and of foreign banks.
The procedure of authorizing the banks that are Romanian legal entities implies going through three stages:
- approving the bank's establishment;
- registering the established banking company with the Trade Registry;
- authorizing the bank's functioning.
Branches of the foreign banks have to follow the above-mentioned procedure by the law for authorizing the foreign legal entities. The quantum of the minimum share capital of such banks is the same as for the minimum share capital of the banks that are Romanian legal entities. Nevertheless, the activities carried out by the branches of the foreign banks may not exceed the object of activity of the mother-company.
Representative offices of foreign banks Banks that are foreign legal entities are obliged to notify the NBR with respect to the opening of representative offices in Romania, and the authorization of the functioning thereof is issued by the Ministry of Industry and Resources.
Their activity is limited to informing, liaising or representing, and they are not authorized to carry out any banking operations.
Supervising the banks' activity The NBR, in its capacity of authority for prudent banking supervision, may decide upon measures for implementing special supervision and special administration of banks.
Special supervision is implemented for a maximum of 120 days, pursuant to a breaching of the law or of the regulations issued by the NBR, discovered while conducting actions of supervision and/or analysis of the banks' reporting, as well as in case of finding a poor financial condition. The special supervision is conducted by a commission composed of NBR specialists, who shall submit periodical reports to the NBR with respect to the situation of the bank subject to supervision.
In the event that the bank's activity is further found to present serious deficiencies, the NBR may decide, on a case-per-case basis, to implement measures of special administration of the respective bank. Special administration is carried out by a special administrator appointed by the board of administration of the NBR.
The special administrator fully takes over the duties of the board of administration of the bank subject to the special administration regime, and is to further submit a written report to the NBR with respect to the financial condition of the bank and the possibility of recovery of the bank's financial security.
Within 15 days following the receipt of the special administrator's report, the board of administration of the NBR shall decide either to extend the activity of the special administrator for a limited period or to withdraw the authorization and notify the competent court for the commencement of the bank's liquidation procedure.
Capitalization of the banking assets and privatization of the banks with state capital In view of privatization, the abatement of the state-owned banks from the non-performing banking assets that the same hold is achieved through a specialized institution of the central public administration subordinated to the Government, called the Authority for the Capitalization of Banking Assets (AVAB).
AVAB takes over the non-performing banking assets (non-performing claims, movable and immovable goods included in the patrimony of the banks pursuant to the enforcement procedures, as well as the commercial claims associated to the banking assets subject to capitalization) with the payment at the net value of the same and capitalizes them at their market value, resulting from the proportion between demand and offer.
Privatization of the state-owned banking companies is achieved in Romania through one of the following three methods: - increase of the share capital by means of a private capital contribution, in cash, on the basis of a public offer or a private placement;
- sale of shares administered by the Authority for Privatization and Administration of State Participations (APAPS), only in exchange for cash, with full payment to Romanian and foreign individuals, as well as to Romanian and foreign legal entities with a majority of private capital;
- a combination of the methods set forth above. Currently, the most important privatized banks in Romania are:
Banc Post taken over by GE Capital, which subsequently assigned part of its shares to two other foreign banks; in November 2002 the last package of shares held by the state, representing 17% of the share capital, was sold to the Hellenic bank Eurobank Ergasias;
The Romanian Bank for Development taken over by Societe Generale; and Banca Agricola the majority package was taken over by a consortium formed of Raiffeisenbank and the Romanian-American Investment Fund.
The bank privatization process continues, and the privatization of the bank that holds the highest market share the Romanian Commercial Bank is still expected. During the year 2002, the Romanian state organized two unsuccessful tenders for the sale of approximately 70% of the shares held at Romanian Commercial Bank; therefore the privatization strategy is anticipated to suffer a change.
| 
