Awards for Excellence 2017
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The small and medium-sized enterprise segment has proved a tough nut for many Romanian banks to crack. Lack of transparency and what local bankers euphemistically call “tax management” by companies can make lending challenging. High levels of NPLs in the sector after the financial crisis have also put a dampener on credit supply to the sector.
For those that can navigate the segment, however, the rewards can be substantial – as Banca Transilvania, the winner of this year’s best bank for SMEs award, has demonstrated over the past 10 years. Ranked just 10th in Romania by total assets in 2009, the Cluj-based lender has since grown at break-neck pace to become one of the country’s two leading universal banks, second only to BCR.
Despite its meteoric rise, however, Banca Transilvania has remained true to its roots as a ‘bank for entrepreneurs’. SMEs account for nearly a third of the bank’s outstanding lending, as well as 25% of deposits and nearly 30% of revenues. Around 200,000 small firms and entrepreneurs have active accounts with Banca Transilvania, representing roughly 40% of the sector, while nearly a third of new businesses chose the bank as a financial partner.
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Tiberiu Moisa, |
Banca Transilvania has also been a pioneer in Romania of products and services targeted at SMEs in specific sectors, with offerings for agricultural firms and doctors proving particularly popular. Meanwhile, a non-profit venture called BT Club provides financial training for thousands of Romanian entrepreneurs every year via seminars and other events.
Bank officials attribute its success to an in-depth understanding of the SME sector and a highly conservative approach to risk management. Banca Transilvania has traditionally offered relatively small loans and demanded high levels of collateral. It has also refused to extend foreign-currency loans to small businesses. As a result, the bank’s asset quality in the segment has consistently been well above that of rivals.
SME banking in Romania is becoming increasingly competitive as the economy recovers and the sector shakes off the effects of the financial crisis. Nevertheless, Banca Transilvania continues to hold its own. Tiberiu Moisa, deputy CEO and head of SME banking, says this is partly because the bank’s own entrepreneurial spirit strikes a chord with small business owners.
“SME banking is not just a business segment to us, it’s a mindset,” he says. “Throughout the bank there is a sense that we need to walk the extra mile to support our customers and solve their problems. As an SME, you are a small company, but you will not feel like a number with us.”
He notes that Banca Transilvania is also continuously improving its offering for SMEs. December saw the launch of BT Mic, a startup dedicated to microfinance, with which the bank is hoping to reach customers usually considered unbankable. The initial response has been positive. In less than five months, BT Mic had already granted more than 1,500 loans.
Other recent initiatives include changes to the lending process to allow for higher volumes. The bank is also working on a new digital platform that Moisa says will be “revolutionary” for its SME client base. He adds that he still sees huge potential in the sector.
“Opportunities will come as we follow our strategic roadmap,” he says. “We are building an ecosystem for SMEs that will combine conventional banking, new amazing tools enabled by technology and digitalization with other interesting new features that we are working on.
“This has been always the fun part of SME banking. The sector may be more volatile in terms of credit risk but it is vibrant and always pushes towards new ways of thinking.”
