Coface: Insolvencies in Romania down 17 percent in Q3

Newsroom 13/11/2014 | 11:31

During the first nine months of this year 15,575 new insolvencies were registered in Romania, down 17 percent compared to the same period of 2013, when 18.735 new insolvencies were opened, an analysis by credit risk management firm Coface shows. The analysis is based on the data provided by the National Trade Registry.

The sectors that reported highest number of insolvencies at 1,000 active companies are: constructions, textiles, HORECA, mining and quarrying industries and transports. Bucharest remains the only region where insolvencies increased over the first nine months of the year, up by 24 percent, while the rest of the regions have registered a decrease.

“The decrease in the number of insolvencies is registered in the context of a high volume of insolvencies during the last five years, especially during the 4th Quarter of 2013. Thus, this dynamic is explained rather against a base effect, among the comparison with a record volume of new insolvencies registered in the same period last year. The value of payment instruments rejected in the first nine months of this year also registered a contraction of 22 percent, compared to the same period, last year. The dynamics is particularly deed to a decrease of the volume of payment instruments used among diminishing the trust between business partners,” explained Constantin Coman, country manager of Coface Romania.

“The revival of the private sector is setting in, even though Romania continues to significantly lack in entrepreneurial capabilities, impacting the registration of new profitable businesses. Thus, even if the number of companies that have ceased the activity in the first nine months of this year is down by 17 percent compared to the same period of the previous year; the number of the new companies registered in the same period presented a contraction even higher, respectively of 22 percent,” Coman added.

According to the data compiled by Coface, the debt incurred to private suppliers by insolvent companies in the first nine months of the year amounted to RON 4.7 billion, while those to banks stood to RON 3.7 billion and to fiscal authorities to RON 1 billion.

Some of the structural causes resulting in the start of insolvency procedures were found to be: the additional debt attracted to cover loss and receivables’ investment, while the book value of the fixed assets remained constant; an inadequate credit risk policy, causing a slower supplier payment, with the average payment term increasing by 122 days.

 

 

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