Deloitte Romania and Reff & Associates, assisted Patria Bank in the sale process of a portfolio of debts worth a total of 502 million lei to KRUK. The portfolio put on sale was segmented in two installments, each sold as a result of a dedicated competitive buyer selection process.
The first tranche of the portfolio, with a nominal value of approximately 245 million lei, was sold in October 2018 and included unsecured consumer loans to individuals. The portfolio of a total nominal value of approximately 257 million lei, which is the subject of the second installment, announced in January 2019, consists of receivables resulting from guaranteed credit agreements granted to legal entities and consumers.
In both phases of the project, the Deloitte Romania financial consultants team provided complete assistance in structuring the transaction, preparing databases, planning and coordinating sales processes. The team was led by Radu Dumitrescu, Transaction Support Partner, and Bogdan Mazilu, Assistant Director, coordinated financial assistance services with the support of consultants Crina Ciudin and Radu Constantin.
"Although the market for bad loans is significantly influenced by changes in the tax code and potential legislative changes that affect banking and debt collection, this project gives me hope that we will continue to witness such transactions to help banks improve financial performance. These transactions were some of the most important ones started in Romania in 2018 on this niche, both in terms of complexity and as a percentage of the total value of the local market, "said Radu Dumitrescu, Transaction Support Services Partner, Deloitte Romania.
In both phases of the project and in both portfolio segments, Reff & Associates' law firm was involved in all legal aspects of the competitive buyer selection process, from the preliminary legal structure to the drafting of the proposed assignment contracts proposed by the bank potential investors, as well as throughout the negotiation sessions, until the transfer documentation is signed. Also, regarding the sale of the second installment, the law firm will assist Patria Bank until post-transfer formalities are completed. The project was led by Andrei Burz-Pînzaru, Managing Partner at Reff & Associates and coordinated by Andreea Şerban, Managing Associate, with the support of Lorena Roşia, Senior Associate, and Dănuţ Arion, Associate.
"Reff & Associates' assistance in this operation confirms our team's top position in the field of this type of transaction. The execution of these transactions in a less fast time for the secondary market of non-performing debt claims in Romania supports the fact that the sale of these portfolios remains one of the key instruments at the disposal of banks for the efficient management of these cases. It remains to be seen whether we will continue to develop legislative developments limiting this kind of local operations or whether the Romanian legislator will understand the harmonization of legislation in line with the practice of the other EU countries and the recommendations of the European Central Bank that stimulate this market in order to ensuring a stable and sustainable lending environment, " said Andrei Burz-Pînzaru, Managing Partner at Reff & Associates, a member of the Deloitte Legal global network.