Andreas Treichl: A fresh perspective on the Romanian business

In an interview to Ziarul Financiar, the leading business daily in Romania, the CEO of Erste Group Andreas Treichl spoke about the current status of BCR - the largest bank in Romania, that finances a third of the Romanian economy, about the bank’s restructuring process and the NPLs clean-up, as well as about the plans for BCR’s future.

Andreas Treichl pointed out that BCR’s turnaround programme, which in the last three years focused on eliminating risks and improving efficiency, increased BCR efficiency by more than 20% and fundamentally changed the Bank. “The risk elimination came at a very high price for the shareholders and taught us the lesson of sustainability. Our sustained efforts to improve the loans portfolio quality paid off and set the pace for a fresh start and BCR’s sustainable growth”, Mr. Treichl said.

Client service quality is key for executing BCR’s current strategy, therefore right now we focus our efforts on critical improvements such as credit process re-engineering, infrastructure & technological upgrade, operational and analytical CRM, bank wide training/ testing/ licensing of the staff.

In a nutshell, BCR’s strategy aims to generate solid revenues, value for clients and prosperity for the country, having as direct result the long term financing of the Romanian economy.

Here are some of the interview’s highlights:

• Last year's clean-up at BCR has started to pay off, prompting a decline in risk costs for nonperforming loans and stable provisioning, while the improving economic environment is bringing about a pick-up in lending. Currently BCR NPLs ratio decreased from 30.3% in Q1 2014 to 25.6% in Q1 2015. Improving asset quality continues to remain a priority for us. It is an absolute prerequisite to revive lending, but also for BCR to fully accomplish its role as a true financial intermediary for Romania.
• BCR must “structurally” improve its relationship with corporate clients and that is why it will fully reassess the products and processes that pertain to lending on this segment. We focus on local and regional companies in strategic industry sectors & infrastructure, on export and supply chain driven manufacturing. The focus on corporate clients can create high value, provided the natural financing needs of the region remained intact and considering further European inter-connection of the markets.
• The potential exists for lending in all economic segments, tightly connected to Romania’s economic development. Consumer sentiment seems to have improved and increased consumption has the potential to change the mood in the business sector as well. As far as retail lending goes, psychologically, the population has learned its lessons from the crisis and now is much more conservative.
• Currently we see a high potential in RON-denominated lending - whether we are talking about mortgage loans for consumers, where we are market leaders commanding a quarter of the new production in RON, about consumer loans, where improved risk assessment instruments led to revival on an ascending path of such loans volumes, or - on a medium term - about corporate lending. The strategic decision that BCR took almost two years ago, to push RON-denominated loans towards customers, to the detriment of FX-denominated loans, was a winner, particularly as interest rates for RON-denominated loans dropped dramatically.
• I want to particularly emphasize our long term commitment to infrastructure financing in Romania. I trust that, independent of the governing party, the local political class will understand the need to place large infrastructure projects outside the 4-years election cycle and will manage these as priority projects of national interest.
• Our bet on Romania and Central and Eastern Europe is based on two pillars: The European Union project will continue and the CEE countries will continue to develop in societies with a prosperous middle-class. From a historic perspective, only 25 years since the fall of communism, these markets have not yet shown Europe everything they can do, because the middle-class is still in formation. This is a logical matter, this is why I trust BCR and Romania as much as I did 10 years ago.
• Our objectives are deeply tied to the country's economic, political and regulatory agenda so that is why we can be nothing short of a very dedicated advocate of the country. And the most critical thing right now is to align perspectives and priorities at the highest level, so that our efforts go in the same direction.
• We will continue to be tightly engaged in Romania. Its success is our success.