Awards for Excellence 2017
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When Erste bought Banca Comerciala Romana (BCR) in 2005, the bank came with a lot of baggage. As the main financier of Romania’s corporate sector through much of the post-Communist period, it was deeply embedded in the power structures of a country notorious for bad governance and lack of transparency.
What this meant for BCR and its new owner became clear when the financial crisis hit in 2008. As Romania’s economy plunged into recession and a real estate bubble burst, huge portfolios of corporate debt began to turn sour. Initial attempts to tackle the issue achieved little beyond highlighting the weaknesses of BCR’s risk management systems.
The overdue turnaround finally got underway the following year when a new management team was brought in, led by restructuring expert Tomas Spurny, with a mandate was to clean up BCR and transform it into a modern, commercially viable bank.
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| Sergiu Manea, BCR |
Over the next three years, Spurny and his team did just that. Impaired assets were transferred to a newly created bad bank and then written off, restructured or sold. From a peak of nearly 30% in 2012/13, BCR’s NPL ratio was cut to 23.7% after the sale of €670 million worth of NPLs in 2014. Further sales and work-outs subsequently brought the ratio down to 11.8% by the end of 2016. Provisioning of bad debts was substantially increased, leading to a €614 million net loss in 2014 but putting BCR on a sounder financial footing.
Spurny and his team also revamped the bank’s systems for NPL recognition and recovery, as well as completely reengineering the credit process on the corporate side to make it more transparent and more efficient. Approval times for loans to companies were cut from an average of 55 days in 2012 to just 14 days last year.
Meanwhile, a cost-cutting drive saw BCR’s headcount reduced by 25% in the three years to the end of 2015. A retraining programme was also introduced for the remaining staff to build a modern customer service culture throughout the bank.
By late 2015, when Spurny stood down as CEO, BCR was well on the road to recovery. A focus on local currency lending and the retail segment was starting to pay handsome dividends as Romania’s economic recovery gathered speed and domestic consumption surged.
Spurny’s successor, Sergiu Manea, has kept up the good work. Part of the management team appointed in 2012, Manea was responsible for capital markets and large corporates before taking over the top job.
Under his leadership, NPL restructuring has continued apace. Profitability and lending growth have also recovered strongly, while a 50,000 rise in the number of active customers last year testifies to BCR’s success in rebuilding trust in the bank among Romanian companies and individuals.
With the clean-up mostly completed, Manea is now turning his attention to the next challenge – preparing BCR to meet the digital revolution. The bank has already invested heavily in technology and is due to launch Erste’s cross-country digital platform, George, before the end of 2018.
“We have completed one part of the transformation and we are now entering the next stage,” says Manea. “We have created a sound bank with a fortress balance sheet. Now we have to ensure that it is ready to adapt to whatever banking will be in 2025 or 2030. For that we need to be competent, flexible and focused on our customers.”
Getting to this point has only been possible thanks to the dedication of the bank’s management. The award for bank transformation in CEE goes to BCR this year in recognition of their achievements.
