Marcel Barbut, AdePlast: Banks shore up multinational companies from their home countries over Romanian companies

The owner of construction materials AdePlast, Marcel Barbut, signals a negative situation in the lending market that many managers refuse to talk about: foreign banks are siding with the companies in their home countries over companies fully owned by Romanian entrepreneurs.

Lenders are raising interests and this will drive many firms to collapse

“Many multinational banks shore up companies from their home countries that are active in Romania, over local firms. The credit standards are much better for multinational companies”, Marcel Barbut, owner of construction material manufacturer said in an interview to Wall-Street.

Moreover, Barbut pinpoints another factor that caused the weakening of the lending activity in the corporate sector in Romania: after RoBor was doubled, the lenders are now raising their margins barefacedly and without any prior negotiation, and this will surely drive many companies to default”. And all this, Barbut added, amid a generally European trend of lowering interests in an attempt to help companies cope with the crisis, while for many Romanian companies, euro currency lending activity is now practically in a resting point.

Nearly 35-40% of the construction companies are at risk of bankruptcy if the projects in the field will not receive a prompt financing, according to Laurentiu Plosceanu, chairman of Romanian Association of Construction Entrepreneurs (ARACO).

The construction market, he added, is likely to record a roughly 80-85% downdraft from last year, or a 10% growth in the event of a prompt measure.

At a simple calculation, one-month Euribor is 1,493% plus a 3% margin, the total interest would be 4.493%. One-month Robor is 15.21% plus an equal margin of 3%, and the total interest would be 18.21%. “The interest gap is tragic, and a small company will not stand a chance to survive the crisis. It is not our case, but many local companies will disappear”, said Barbut.

According to the founder of the company, Adeplast doesn’t need any financial aid for the moment. “We are a strong group and we will overcome this crisis. However, we find that an equivalent value of RoBor and Eurobor would be necessary, in order to benefit of the same lending conditions as Member States”, Barbut explained.

No need for lenders to become real estate agencies

As for the evolution of the construction market in 2009 and the factors that would negatively influence it, Barbut affirms the distinction between the two segments: residential and non-residential. “If the first one is dented by the lending compression, the second one can only reel from the weak foreign investments in Romania by restricting the penetration of foreign companies in the market and by the exit of others. I believe we are the ones who actually tailor the new opportunities”, said Barbut.

Only the relaxation of the lending standards can be an opportunity in the market, AdePlast chairman added, suggesting that banks need to understand that now they have to be part of the national economic structure.

According to ARACO, the decline of the construction sector depends upon the dynamics of the infrastructure works, of the joint financing of works, reduction of VAT for heat rehabilitation works and construction of social housing units, as well as reduction or deduction of takes on reinvested profit.

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