Romanian Banca Carpatica returns to the red, shareholders to decide on strategic investor

Romanian private bank Banca Comerciala Carpatica (BVB ticker: BCC) recorded EUR 4.9 million losses in the first nine months of this year due to higher provisions for non-performing loans (NPLs). In the first nine months of last year, Carpatica had a net profit of EUR 4.4 million. The bank’s shareholders will soon decide on strategic investor options. The bank’s operating revenues were down by 2% to EUR 34.9 million, while the operational profit declined by almost 10%, to EUR 8 million. The final result, however, was impacted by the higher risk costs. The bank made new provisions of EUR 11.9 million in the first nine months of this year, 3.6 times larger than in the same period of 2013, after the central bank asked local lenders to accelerate the clean-up process of their portfolios. “The risk provisions and the more conservative valuation policy have significantly affected the net result,” said Johan Gabriels, CEO of Banca Carpatica. “In our view, 2014 is not a good year to increase our risk appetite in order to counterbalance the declining revenues from out historical loan portfolio,” he added. Banca Carpatica granted new loans worth almost EUR 75 million in the first nine months, targeting low risk clients, but at the same time reduced its exposure to other clients. The bank also removed EUR 27 million worth of bad loans from its balance sheet, in September, which represents 19% of its non-performing loans portfolio. At September 30, 2014, the bank’s NPL rate was 37.8% The overall value of Carpatica’s performing loans portfolio declined by 2.8% compared to December 31, 2013, to EUR 270 million. The volume of deposits also declined by 2.9%, to EUR 619 million. With a loans to deposits ratio of 53%, the bank has enough liquidity to increase its lending activity, according to the quarterly report. The bank’s total assets declined by 19% compared to the end of last year, to EUR 745 million, as the bank sold an important part of its financial assets portfolio. The bank’s shareholders, in March, decided to let the management look for investors to take over the bank and help it recover. In recent months Romanian media wrote that four investors are interested in taking over the bank. “We have made significant progress towards identifying strategic investors and, in a short while, the bank’s shareholders will analyze the options and make a decision,” Johan Gabriels said. The bank’s founder and majority shareholder Ilie Carabulea, one of the richest Romanian businessmen, had his voting rights suspended by Romania’s National Bank (BNR), in February, after he was arrested in January for alleged bribery and influence peddling related to his insurance business, Carpatica Asig.