In its first factor finance project across its 29 countries of operations, the EBRD is lending Compania de Factoring (CdF), the first factoring company in Romania, €6.5mn to promote private sector growth, including the development of small and medium-sized enterprises and retail lending across the country.
Factoring is a process whereby financial intermediaries such as CdF buy receivables such as outstanding debt or other monetary obligations from companies. CdF will use the EBRD loan, being provided in Romanian Lei and Euro, to strengthen its funding base to buy receivables from private businesses. By doing so, SMEs and retailers will have more access to finance to expand their businesses. The project is part of the EBRD’s Trade Facilitation Programme, which supports the development of international trade and domestic and international factoring.
Kurt Geiger, EBRD business group director for financial institutions, says this loan is the first financing arranged by the bank for a factoring company across its 29 countries of operation.
In Romania this will have a wide impact in helping local enterprises become more competitive through more access to financing, and the novelty of the loan is reflected in the interest international investors are taking, adds Geiger.
Established in 2006, CdF reaches many clients across all segments of society throughout Romania, ranging from corporate companies to SMEs. The company is 50:50 owned by Intermarket Bank, Austria (an A-rated bank and well known international factor) and Banca Transilvania, Romania.
Romania’s accession to the EU has brought new challenges for the Romanian non-banking financial entities, says Valentin Chirca, CEO of CdF. This is the first international financing organised for CdF by an international financial institution and will be followed by other similar transactions. This loan will consolidate our leadership position in the nascent Romanian private factoring sector, says Chirca.
The EBRD is the largest investor in Romania, having committed more than €3.47bn in over 192 projects.