CEC Bank will use the 1.4 billion lei loan obtained from the Ministry of Finance, its shareholder, to ensure compliance with European requirements on bank capitalization (MREL), the financial-banking institution said in a statement sent to AGERPRES on Friday.
“In the next period, CEC Bank will initiate the steps for contracting the subordinated loan of 1.4 billion lei approved in today’s Government meeting (no. 26.11.2021), in order to ensure compliance with the European requirements on bank capitalization (MREL). This loan was included in the 2019-2023 Business Plan which formed the basis of the capital increase process and which was approved by the European Commission in 2019, passing the prudent private investor test. the level of the market and will reimburse it at the expiration of the term of 10 years, in a single installment “, it is specified in the communiqué.
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The funds from this loan meet the regulated conditions for classification in the category of level II own funds, will be added to the bank’s own funds and allow CEC Bank to continue its development and finance the economy. The contracting of subordinated loans is a common practice for complying with MREL capital requirements, both at the level of Romanian banks (through subordinated loans from the parent banks) and at European level, underlines the quoted source.
“Starting with 2019, when the Business Plan was approved and the increase of the bank’s share capital in market conditions, CEC Bank started an extensive program to modernize and consolidate its position. The bank’s assets increased by over 35% during 2019- September 2021, up to 45.15 billion lei, and the bank actively financed the Romanian economy: over 17 billion lei financing granted to the private sector and over 5 billion lei – net financing granted to the public sector (especially through government securities). Simultaneously with the growth process, CEC Bank started an extensive modernization and efficiency program and focused on meeting the indicators in the Business Plan approved by the European Commission.In the period 2019 – September 2021, the bank improved its performance and generated a cumulative net profit of 1.05 billion lei, record profits being reported every year “, it is also shown in the communiqué, according to Agerpres.ro.
At the same time, CEC Bank intends to ensure in the future the need for eligible liabilities to cover the MREL requirement by issuing bonds, the traditional sources of the bank consisting in deposits attracted from customers, which are not eligible for this purpose. In this regard, the bank states that it has already started the first preliminary actions to access the capital markets, by initiating talks with one of the largest credit rating agencies and by laying the foundations for a future investor relations office. The next steps are to obtain the credit rating and to approve an MTN (Medium Term Note) program, based on which the bank can make successive bond issues.
On Friday morning, the Ministry of Finance announced that it will grant a subordinated loan to CEC Bank, amounting to 1.4 billion lei, for a period of 10 years, from the state budget for 2021, according to the draft Emergency Ordinance on rectification of the state budget for 2021, published on the MoF website.
CEC Bank is the financial institution with the longest tradition in Romania. Founded in 1864, CEC Bank currently has the largest national network, with over 1,000 branches and territorial units and assets of 45.1 billion lei at the end of September 2021 – increasing by 20.5% compared to the similar period of the previous year.
CEC Bank offers a full range of products and services to individuals, SMEs and large corporations, through multiple distribution channels: banking units, ATM networks, internet banking (CEConline), mobile banking and the CEC_IN virtual store – where they can be accessed 100% online banking products and services.