Boran, BSTDB, talks about Romanian agribusiness
The Black Sea Trade and Development Bank (BSTDB) has provided a total of 52 million Euro to three agribusiness projects in Romania so far. Mustafa Boran, vice president banking, told Alexandra Lopotaru where Romania's agriculture stands within the strategy of the bank.
In line with the Black Sea Trade and Development Bank′s (BSTDB) 2011-2014 country strategy for Romania, its priority is to support investment in infrastructure, energy efficiency, telecommunications, SMEs and agribusiness, according to Mustafa Boran, BSTDB′s vice president banking.
This year, BSTDB celebrates the 15th anniversary since the start of operations within 11 countries of the Black Sea region, including Romania, Republic of Moldova, Bulgaria and Russia. During this period, the bank financed 15 operations in agriculture and agribusiness, with signed loan agreements exceeding 135 million Euro. These operations include direct financing to companies and BSTDB credit lines to local financial intermediaries for sub-lending to micro-, small-, and medium-sized enterprises (SMEs) operating in agriculture and agribusiness sectors. Romanian companies account for more than a third of the Bank's agribusiness portfolio, while Russian companies received about a quarter of the Bank's financing in the sector.
"BSTDB has provided a total of 52 million Euro to three agribusiness projects in Romania," Boran told The Diplomat – Bucharest. "This amount does not include smaller operations financed through BSTDB SME credit lines to Romanian financial institutions."
In 2013, the BSTDB granted a 15-million Euro loan to Agricover Group, the sole provider of complete solutions for agriculture in Romania. Half of the financing went to support the Group's grain production, processing and trading segment, while the remaining amount went to financing Romanian farmers. Moreover, the bank granted a seven-million Euro loan to Patria Credit for further lending to micro and small enterprises across Romania which are active in the agriculture sector as well. In 2012, the Bank provided a 30 million Euro loan to Olympus/Fabrica de Lapte company.
"Agriculture and agribusiness are sectors where Romania has a clear competitive advantage," said Boran. "These sectors are among Romania's main income and employment generators. Romania was once known as the "bread basket" of Europe, and today it is the fifth largest grain producer in the European Union. Agriculture, including dairy, fruits, vegetables and cereals and food processing, has the potential to become a driving force of economic growth. With plenty of idle capacity in agriculture and a strong entrepreneurial class, Romanian agribusiness and agriculture present a significant opportunity for increased BSTDB financing in the near and medium term."
Besides agribusiness, during 2014, the final year of the 2011 – 2014 Strategy, BSTD is focusing on a number of projects on the local market, including those concerning energy efficiency. Thus, in March 2014, BSTDB extended a ten Euro million loan to support EDP Renewables, a global leader in renewable energy, in its construction and operation of six solar photovoltaic parks for a total of 50 MW in the Romanian southern region of Oltenia. "It was BSTDB's first solar energy project in the Black Sea region," added Boran.
What are the conditions for a company to obtain an agribusiness loan?
The Black Sea Trade and Development Bank is ready to consider any business proposal that meets its criteria on promoting economic development and regional cooperation, according to Boran. The Bank's contribution is normally up to 35 per cent of the total project costs. In green field projects, BSTDB normally acts as a complementary source of financing, contributing part of the project costs. The Bank thus supplements funds from sponsors and other financiers. However, the Bank may provide corporate loans to existing companies that exceed 35 per cent of project costs, with loan amounts determined on the basis of the financial strength of the borrower. Moreover, as a general rule, the bank finances medium-sized projects, providing loans from four million to 48 million Euro per project. "For projects with a strong regional development impact, the bank may consider financing below four million Euro," said the vice president banking. "For such small projects, the bank normally uses selected local financial institutions as intermediaries. All financing proposals are subject to project appraisal, internal due diligence, and approval by the BSTDB Board of Directors."
However, Boran went on and added that the Bank places special emphasis on loan security. For private sector operations, BSTDB requires a commercial security, including assignment of receivables, pledge of borrower′s shares, mortgage on land, buildings and equipment, and pledge of on-shore and off-shore revenue accounts. "When considering a project proposal, we ask for the project feasibility study and recent financial statements of the sponsors/guarantors/company prepared in accordance with International Financial Reporting Standards (IFRS)," he said. "If on the basis of the preliminary information the Bank decides to proceed with project preparation, a properly prepared business plan is required."
BSTDB was established by Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine which are the 11 founding countries of the Black Sea Economic Cooperation (BSEC) as a financial pillar of BSEC. As of end 2013, BSTDB′s cumulative portfolio in its 11 member countries has reached 277 approved operations in the sectors of infrastructure, energy, transport, manufacturing, telecommunications, financial sector and other important areas, amounting to approximately three billion Euro.