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MSME lending in Romania

Building a small business banking culture at traditional commercial banks


YEARS

2002-2012

CLIENT DESCRIPTION

In separate engagements, Enclude worked with five diverse banks, including the primary state-owned bank (CEC Bank), the commercial bank with the largest network (Banca Comerciala Romana), the primary local bank serving small and medium enterprises (Banca Transilvania), as well as OTP Bank and Milennium Bank.

CLIENT'S OBJECTIVE

Profitably extend access to credit and other banking services to micro, small and medium sized enterprises.

Results

BUSINESS RESULTS

During their engagements with Enclude, four of these five banks made a total of 1,018 SME loans representing EUR 79.3 million. Through all of its SME engagements with Romanian banks, Enclude contributed to 3,422 SME loans, representing EUR 222.3 million.

Some of the most successful bankers in Romania today were trained by Enclude as part of the EBRD SME Finance Facility projects.

SOCIAL & ENVIRONMENTAL OUTCOMES:

Micro, small and medium-sized and rural businesses have significantly greater access to finance services.

Promoting small and growing businesses and entrepreneurs creates jobs and generates wealth.

Activities

Reviewed and redesigned the banks’ MSME strategies, emphasising client segmentation, product development and credit risk management.

Developed specific products for important segments such as agricultural businesses and women entrepreneurs.

Streamlined the banks’ lending processes and implemented credit scoring models to better respond to the needs of MSMEs.

Trained over 1100 bank staff members in MSME lending and cash flow analysis.

LEARNINGS

MSME’s access to finance can be improved by implementing cash flow analysis and a good methodology for nonfinancial analysis. As markets develop, new tools such as credit scoring or segment-specific approaches are necessary to better respond to the needs of MSMEs. Finally, as specific business sectors grow, such as agricultural businesses or women entrepreneurs, banks need to respond with greater product innovation and dedicated marketing activities.

Romania