The Dutch vehicle was founded in 2008 by Raiffeisen International, to secure certain non-collateral consumer loan packages of the Romanian subsidiary. Such an operation allows the Romanian subsidiary to obtain funds for financing and lowering costs with the cash reserve ratio.
ROOF Consumer Romania can refinance the loan package taken over from the local subsidiary by issuing shares which would be sold on the market through a private international placement, an alternative since financing has become increasingly more expensive.
Raiffeisen Bank Romania externalized €2 billion in loans last year, with the loan-deposit ratio down to 73 percent from some 120 percent.
Romanian subsidiaries of foreign banks have been externalizing loans to mother-groups for some years, due to the need for differential treatments of loan provisions. “It is more advantageous for us to externalize loans, and we will probably continue until such time as the RAS [Romanian Accounting Standards] and the IFRS [International Financial Reporting Standards] are equivalent from this point of view. Practically speaking, when the amounts are externalized, in case this is necessary, a provision is set for the difference between the value of the loan and the collateral. According to RAS regulations, the collateral is presently accepted up to 25 percent,” said Rasvan Radu, Chief Executive Officer of UniCredit Tiriac Bank.
