Annual Report 2010 - ProCredit Bank

Letter from the Board of Administrators
In 2010 Romania faced the difficult task of reconciling short-term fiscal consolidation with the need to mitigate
the social costs of the economic crisis and restore the sources of sustainable and equitable growth. To
this end, the government moved to contain the impact of the crisis and revive the structural reform agenda
that had faltered since the country’s accession to the EU in 2007. The crisis also forced the state to implement
fiscal adjustment measures and re-evaluate its policies, including its public sector wage expenditures.
To achieve the 2010 target of keeping the fiscal deficit at or below 6.8% of GDP, the government passed a
far-reaching austerity package that decreased public sector wages by 25%, increased VAT to 24%, and reduced
social assistance programmes (including goods and services). It remains to be seen whether and to
what extent the reforms – which have been supported by the IMF and EU – will indeed help to stabilise the
internal economic situation and thus create a healthy basis for Romania’s future development.
In the banking sector, the quality of the loan portfolio further deteriorated in 2010 for a multitude of reasons:
the increasing unemployment rate, the stagnation of real wages and the lay-off of many public and
private sector employees. In addition, lending activities remained weak this year and currency substitution
continued (loans in Romania are denominated increasingly in EUR). However, some sectors reported
growth – albeit moderate – in economic activity. Despite this progress, we expect the overall trend in
lending to remain reserved throughout 2011.
In line with its business strategy of being the house bank for small businesses, ProCredit Bank supported
its clients throughout this difficult year. In 2010, it put significant effort into adjusting its institutional
structures to better serve its core client groups of urban and rural small enterprises and private individuals.
Among other measures, the acquisition process was reviewed and modified to enhance the efficiency
of our client approach, and, in keeping with the ProCredit Group’s overall strategy of building stronger
relationships with enterprise clients, in November 2010 the bank opened its first business centre in Bucharest.
More of these specialised branches, which cater to the needs of small businesses, are scheduled
to follow in 2011. In addition, the bank not only increased its loan portfolio, but during the last quarter of
2010 also maintained the portfolio’s relatively high quality despite the difficult economic environment.
However, working with clients who were not able to service their loans in time continued to be a central
issue for the institution throughout 2010, and management consequently made recovery and restructuring
top priorities.
In order to strengthen ProCredit Bank Romania’s capital base and to underscore their strong commitment
to the institution, the bank’s shareholders increased its equity by EUR 5 million to EUR 32.6 million, bringing
the capital adequacy ratio at year-end to a comfortable 16.6% (14.1% according to statutory reporting
standards).
2010 was another year of great challenges and intensive learning for ProCredit Bank Romania. The ability
of our staff and management team to cope with the quickly changing environment, to take sound decisions
under difficult conditions, and to communicate openly and honestly with clients, business partners
and the general public at all times made us an even stronger institution than we were before. Thus, on
behalf of the entire Board, I would like to extend my sincere thanks to our very dedicated staff and management
team.
Anja Lepp
Chairperson of the Board of Administrators
Letter from the Board of Administrators 5
Members of the
Board of Administrators
as of December 31, 2010:
Anja Lepp
Hanns Martin Hagen
Roger Bardo Rihmland
Dietrich Ohse
Ivaylo Iliev Blagoev
Bank’s Managers
as of December 31, 2010:
Ilinca Rosetti
(General Manager)
Heribert Kailbach
(Deputy General Manager)