The banking debt enforcement process means auctioning off a certain collateral, while leasing companies resort to direct negotiation to sell products recovered from clients with problems.
“A bank debt enforcer focuses only on goods, and auctions these off after an expert sets the price. Prices can drop by any rate, depending on how many auctions are organized,” Arin Stănescu, President of the National Union of Insolvency Practitioners in Romania (UNPIR), told Business Standard.
Banks are more reluctant about publishing sale offers for real estate properties and plots of land. Few of the 41 banks publish auction or sale announcements. Lenders usually resort to foreclosure only when all other means used to recover a receivable have failed.
Bank debt enforcers say that when a loan file comes to their attention, the first thing they do is to convince the client to restructure the loan. The debt enforcement market has generated a veritable war between bank debt enforcers and court debt enforcers. “Romania is the only European country in which banks act as both lenders and enforcers. The existence of such a parallel structure is abnormal,” Marius Crafcenco, President of the National Union of Court Enforcers in Romania, told Business Standard.
On the other hand, sources in the banking system said that the stake for court enforcers is the eight percent commission they could receive for each file. Bank enforcers work without a commission, as they are the employees of banks.
People who want to acquire a property put up for sale by a bank must participate in an auction. Thus, they must submit a guarantee worth 10 percent of the starting price by the deadline set for the auction.
“We do not rule out the option of the auction winner using a bank loan to pay for the good. Thus, banks are at a commercial advantage, but the auction winner must know that within 30 days of the date of the sale, he or she must pay the court enforcer an amount equal to the offered price,” a local bank enforcer told Business Standard.
Raiffeisen Bank has the largest offer of properties put up for sale, with most starting at a price of 75 percent of the assessed value.
