Statements by Bogdan Pleșuvescu, Deputy CEO, Legal, BT, at the debate Restructuring – a measure to prevent insolvency, organized by the publication Financial Intelligence, in March this year, in Bucharest.

Restructuring mechanisms – access to enhanced restructuring frameworks and early-warning tools:

• When a client faces financial distress, there are multiple forces at play — shareholders, employees, suppliers, customers, ANAF, banks, advisers. At that point, all of them need to state transparently their real intention — either to save the company and return it to the economy, or to prioritize recovery of their claims.
• If everyone wants to get their money back quickly and, if possible, ahead of other creditors, then, in my view, there is a 0% chance that this client will ever be brought back into the economy, reintegrated and once again contributing to the state, paying wages and ensuring normal flows in the economy.
• We rely on this balancing of forces to happen through a trusted third party for all participants. Turnaround specialists, consultants and insolvency practitioners are those third parties who must ensure a balance of forces in a procedure and make sure the client is returned to the economy and reintegrated as quickly as possible through restructuring measures.
• From our perspective as lenders, we sometimes gain access to information far too late. Our colleagues in BT’s specialist departments could provide support to companies in difficulty if they found out earlier that there were problems.

Tailored solutions for companies:

• We need to move through three phases — experience, experimentation with various restructuring solutions, and expertise, where we can apply the know-how acquired in a very well-ordered way. Unfortunately, at this point we cannot scale the expertise we have and can only apply tailored solutions. And these tailored solutions work only for large companies. For small companies — for example those currently with FNGCIMM — where the volumes are high, we cannot apply customized restructuring solutions. We should go for standardized solutions that are much easier to implement and involve less bureaucracy.
• It’s an extraordinary professional and personal experience when you have success stories, and the danger is not to get carried away by that success and live off past experiences. It’s very rewarding to receive feedback from clients that have been saved, restructured and reintegrated into the economy and to see that, over the long term, a relationship has been built.
• The nice part is that when you manage to complete a restructuring process, clients no longer want to go back to the commercial team; they want to stay with us, saying: Who is going to check on me now? My accountant doesn’t know — my accountant knows accounting, not finance, not analysis. With you it’s free.
• Clients feel they’re in a comfort zone, having been saved, and can also scale their business.
• A challenge for specialist departments in banks is that we cannot specialize by industry. When you have a client in difficulty, you need to know their competition, the environment and the market they operate in, and make comparisons to see what the standard is. We only have specialists who do financial analysis and specialists who handle balance-sheet and financial restructuring so as to enable the company to restructure its balance sheet.
• We also face the issue of moving from non-performing to viable performing status, where we have 12 months as a probation period and then 24 months as the cure period. All these periods mean very high provisions that banks must set aside, and capital requirements that impact the bank’s financial statements — and that’s where lenders become reluctant to extend financing to clients other than those already in their portfolio.
• At BT, we try to provide crisis financing to clients in our portfolios to help them get through a rough patch. As our bank is the largest SME lender in Romania, we have quite a number of success stories in this respect.