BUSINESS ARENA

No.90/2020

STEVEN van GRONINGEN PRESIDENT & CEO, RAIFFEISEN BANK ROMANIA

We continue to be in competition business-wise, but from a professional and human point of view I feel the need to congratulate all banks for their extraordinary effort and quick reaction.

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Inheriting a long tradition in the area of business events, Business Arena Magazine continues to diversify and expand its programs, covering a wider range of subjects, investors, cities and business sectors. business & luxury serving leading businesses and business leaders in Romania

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CORONAVIRUS INFECTS ECONOMY

EDITORIAL by Cristian Cojanu

Experts and business analysts seem to agree that the world is facing truly extra - ordinary times with uncharted circums tan - ces, and what started as a human health threat of global proportions is rapidly developing into an economic crisis.

In Romania, the Foreign Investors Council (FIC) has warned that the business community needs "urgent measures" to help the economy stay functional. In a recent release, The Concordia Employers' Confederation and the FIC propose a set of over 100 "urgent measures" that should "help the business environment overcome this critical moment" and "protect the consumers from the indirect effects of the coronavirus epidemic."

The two business associations suggest, among other things, that "state support measures are needed to prevent blockages or bankruptcies of otherwise healthy sectors or companies." Also "fast loan schemes guaranteed by the state" should provide support to SMEs "for which deferral of payment of taxes is not enough."

The document also stipulates that the government "must quickly access the financing lines opened by the World Bank and the International Monetary Fund," as well as implement "specific measures for both the retail and transport sectors to ensure the continuous supply of food and medicines to citizens."

The Concordia Employers' Confederation and FIC point out that the labor code should facilitate work from home or from a distance. Moreover, the two associations support an "extension or adaptation of state-guaranteed programs so that banks can provide working capital loans to clients who are usually financially stable but are temporarily affected by the implications of the emergence of the new coronavirus."

Also a rapid intervention is needed in the tourism sector that is "highly exposed to the risk of bankruptcy."

Even so, the prospects for the local economy are not too bright. According to forecasts released by major lenders operating in Romania, recession is coming in 2020. Thus, an Erste Bank report indicated that Romania's economy is expected to contract by 4.7% in 2020, while the consolidated budget gap is forecast to reach 7.3% of the gross domestic product. In turn, BRD predicts a 3.9% contraction, while a pessimistic scenario could lead to a 7.2% drop. Similarly, ING sees a potential 6.6% GDP contraction in 2020.

Meanwhile, the central bank (BNR) decided to cut its monetary policy rate to 2.0% from 2.5%. A BNR statement noted that the decision was part of a package of measures aimed at reducing the impact of the coronavirus crisis on households and companies.

While the full impact of the coronavirus pandemic may still be hard to predict, Business Arena will continue to keep an eye on all the issues affecting the business community, reflecting its views, hopes and challenges.

BANKING IN TIMES OF HEALTH CRISIS

A robust banking system can provide the economy with the strength needed for a quick recovery from crisis. At the same time, crisis situations create unexpected opportunities and Steven van Groningen, President and CEO, Raiffeisen Bank, hopes the banking community can exploit those favorable circumstances to its advantage. In an interview with Business Arena, the Raiffeisen Bank official looks at the challenges and prospects in the context of the coronavirus epidemic.

How is Raiffeisen Bank going to affected by the recession expected to hit Romania, the EU and other countries?

I’m glad you asked this question. I am not worried, and I believe we are going to overcome whatever is coming our way. I never look at short-term factors, when I talk about our bank’s business performance. However, I think I should focus a little bit on the 2019 results we announced on March 18, in line with our financial calendar. Of course, today, when COVID-19 has erased growth forecasts, ushering in the prospects of economic downturn, those figures seem somehow unnaturally positive or already outdated. But it’s not like that! Our solid financial condition and very good capital position have allowed us to enjoy a favorable start to the year, despite the prospects for a severe recession. With the necessary support from the authorities in such circumstances, and with the combined effort of our colleagues, we are in a position to support our customers and suppliers, who, in turn, must support their own suppliers, customers and employees. That’s what we all need to do now.

I would like to speak a little more about what happened this March. We decided to help as much as we can, wherever we can. The bank sped up all payments to its partners, suppliers and the state budget.

On March 25, 2020, we transferred over 27 million lei to the state budget, representing taxes and contributions, even though the go - vernment allowed a payment deferral of up to 30 days after the state of emergency is lifted.

We are aware that the population is making efforts to comply with the rules to prevent the spread of the virus and the activity of some companies has been severely affected by those measures. From that perspective, the Government’s decision to extend the tax payment deadline was justified and welcome. On the other hand, I think that all the companies that can pay their taxes and contributions on time must do so. In March, we also made payments of around 85 million lei to all our suppliers and partners. Of the total, nearly 40% represent payments before scheduled due dates.

Now it is very important for us to support our customers, partners, suppliers, so they can, in turn, support those who depend on them, and preserve as many jobs as possible. We have made many payments before scheduled due dates in order to support the business environment. We know for sure that if we all work together responsibly, we will easily overcome this difficult health crisis, and the economy can recover faster. Last but not least, we decided not to distribute dividends this year and keep a solid capital position.

What measures have been implemented to since the beginning of the crisis? What is the best approach in such circumstances?

The situation created by the public health crisis has major implications in society at all levels, but two of them are now essential for

everyone: the public health and the economy. From the very start our main concern was to protect our employees and customers from the spread of the virus as best we could.

I believe there is no one, individual or company, who hasn’t radically changed their daily life, in this common and unpre - cedented effort to limit the spread of the epidemic. In the short term, this has been our main concern and priority. In other words, protecting employees and customers, and maintaining continuity, both in terms of infrastructure and systems, as well as people. For this, we have prepared business continuity plans and we have implemented them.

We’ve closed down some small agencies in very busy locations and reduced the opening hours of others, so that we can keep a number of units open, providing a reasonable level of services and products to our customers, while maintaining additional staff in reserve at all times. Technology is helping us a lot, especially at our headquarters, where the majority of our colleagues can work from home. We have also relocated a number of teams to other offices. We are adapting to the present conditions every day, complying with the regulations and the measures taken by the authorities, protecting the employees and the customers, continuing to offer our services and products.

As I have already mentioned, another important concern for the bank is to support customers, partners, suppliers and the state budget during this difficult period. We are making daily adjustments so that we can adapt as best we can to the situation.