Patria Bank sold a non-performing loans portfolio with a nominal value of RON 502 million to companies part of Kruk Group. The portfolio has been segmented into two tranches and each of them has been sold following a dedicated competitive process for buyer selection. The first tranche, with a face value of approximately RON 245 million, was sold in October 2018 and comprised unsecured consumer loans. The portfolio with a face value of approximately RON 257 million sold within the second tranche, which was announced in January 2019, comprises secured loans granted to companies and consumers.
The bank was advised by Deloitte Romania and Reff & Associates, a member of the Deloitte Legal global network.
“The expertise of Deloitte and Reff & Associates teams led to the success of these transactions, which have contributed significantly to improving the bank’s financial performance, in its recent journey towards a profitable growth and towards cleaning the balance sheet from non-performing loans,” said Daniela Iliescu, member of the Board of Directors, Patria Bank.
In both stages of the project, Deloitte Romania’s financial advisory team provided comprehensive assistance in structuring the transaction, preparing the databases, planning and coordinating the sale processes. The team was headed by Radu Dumitrescu, Transactions Support Services partner, while Bogdan Mazilu, Assistant Director, coordinated the financial assistance services with the support of consultants Crina Ciudin and Radu Constantin.
“Although the NPL transactions market has been significantly impacted by the changes in the fiscal code and by the potential legislative changes which affect both the banking and the debt collection companies, this project fuels hope that we will continue to see such engagements which help banks improve their financial performance. These transactions were among the most important ones initiated in Romania in 2018 in this niche market, considering both their complexity and their share in the total value of the market,” said Dumitrescu.
During both phases of the project and with respect to both portfolio tranches, Reff & Associates has been involved in all legal matters pertaining to the competitive bids for selecting the buyers, from the preliminary structuring phase, to the drafting of the agreements for the assignment of loan receivables proposed by the bank to the potential investors, as well as throughout the negotiations sessions, up to the signing of the transfer documents. By reference to the second tranche, the law firm will continue to assist Patria Bank up to the completion of post-transfer formalities. The project was headed by Andrei Burz-Pinzaru, Managing Partner, Reff & Associates, and coordinated by Andreea Serban, Managing Associate, with the involvement of Lorena Rosia, Senior Associate, and Danut Arion, Associate.
“The assistance provided by Reff & Associates in this project confirms our team’s leading position in the NPL transactions field. Completing these transactions in a difficult time for the secondary market of NPLs in Romania indicates that selling these portfolios remains one of the key tools for banks to efficiently manage these cases. It remains to be seen if we will continue to see legislative evolutions which limit this type of disposals on the local market or if the Romanian lawmaker will understand to harmonize the legislation with the other EU states and with the Central European Bank’s recommendations, which stimulate this market in order to provide a stable and sustainable lending environment,” said Andrei Burz-Pinzaru.
Deloitte Romania and Reff & Associates are amongst the most active advisors on the Romanian NPL market, with extensive experience in such engagements. During 2014-2018, Reff & Associates assisted banks, investors and debt collection entities in selling or acquiring distressed debts portfolios with an aggregate face value around EUR 6 billion.