Foreclosures worth over €30 mln in November alone

In November alone, financial institutions put up for sale properties, cars, and equipment worth over €30 million. Increasing unemployment, the depreciation of the leu, the deadlock in the economy and in the lending sector represent the engine of growth of the debt enforcement market. Sources in the banking sector say that debt enforcement has a potential of some €5 billion, which represents only "loss" classified loans.

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 Stanescu, 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.

standard.money.ro