General Secretary of the Leasing and Non-Banking Financial Services Association (ALB), Adriana Ahciarliu, told Business Standard exclusively, that unlike most developed countries in the EU, where the leasing market is experiencing a downward trend, Romania’s market is enjoying significant growth. “We estimate a 32 percent increase in 2007, which means the total value of leasing contracts will exceed €4.3 billion,” added Adriana Ahciarliu.
The National Bank of Romania’s (BNR) Stability Report for 2007 confirms that the Romanian leasing market is growing twice as fast as countries in the region due to increasing maturation of that market.
“The share of new leasing contracts of GDP doubled in 2006 year-on-year, thus exceeding performances in other countries in the region. As far as the leasing-financed goods is concerned, the vehicle category lost ground to equipment and real estate financing, which proves a certain degree of saturation on the auto segment and a maturation of the market overall,” the BNR study indicated.
Vehicle, equipment and real estate leasing totaled 26 percent of total leasing financing, as the Stability Report shows, and a 36 percent share on the bank leasing market.
According to the Stability Report, the most important component of the financial market in 2006 was the banking sector, with 83.8 percent of total financial assets, keeping risks associated with leasing companies within reasonable limits.
“The degree of financial depth of the equity and insurance markets remains low while integration with international markets is increasing,” BNR points out.
Authors of the Stability Report have indicated a way in which bank leasing companies can circumvent BNR’s regulations regarding foreign currency loan limitation. “A specific feature of bank leasing is attracting financing sources mostly in lei, while leasing contracts are signed only in euro. The mother bank, beneficiary of foreign currency resources, offers loans in lei to a daughter company while gaining lei from the market, possibly from the latter, which thus acquires the respective goods in euro. At least 65-70 percent of leased goods are imported. The beneficiary of the leasing contract pays installments at the current exchange rate, taking over the currency risk, and implicitly paying interest equivalent to interest on a loan in euro (plus expenses specific to leasing contracts). The leasing company pays the mother bank interest equivalent to that on a loan in lei. In this way, the limitation of foreign currency lending is avoided and the mother bank actually finances the end beneficiary in a foreign currency.”
Supplementary costs generated by the leu-euro interest differences on the leasing market are accepted and absorbed at a consolidated level, within the banking group that finances the operation. BNR specialists say that, given the elimination of foreign currency loan restraints and prudential regulations, the higher rate of leasing lending compared to bank lending will end in 2007.
“We estimate a 32 percent increase in 2007, which means the total value of leasing contracts will exceed €4.3 billion'' Adriana Ahciarliu General Secretary, ALB
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