SOURCES:
BURSA 07.03.2017

EMILIA OLESCU (translated by Cosmin Ghidoveanu)
 
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     * "Banks don't pay taxes unless they want to; between 2011-2015, out of the 46 banks, 19 paid a profit tax in some of those years, and the other banks never paid anything"
     * "The competent institutions should check whether banks with foreign companies are doing hostile takeovers of Romanian companies"
     * "Expenses with the sale of non-performing loans are fully deductible"
     * "Since 95% of the banking system is owned by foreign capital, banks could freeze the financing of Romania's economy"
       Romanian banks only pay taxes if they want to, as they have a very complicated profit reporting system, according to official, very reliable sources.
     They have told us that there are financial institutions which have never paid a profit tax in ten years, posting a loss throughout. Banks use the special legislative provisions and those dedicated to the banking sector to avoid paying profit tax, the quoted sources say, who explain that this is due to the unlimited deductibility of expenses with the sale of non-performing loans (NPL).
     Our sources gave us an example: "Let's say that a bank has made a profit of 100 million Euros and has sold a package of 200 million Euros worth of NPLs. In general, a bank will sell the non-performing loan portfolios at 5-7% of their face value, but according to a study, the median in the system is 11%. Thus, on 200 million Euros worth of NPLs, the bank makes 22 million, posting a loss of 178 million Euros. That loss is fully deductible, according to the legislation in effect. Thus, the institution in question ends the financial year with a loss of 78 million Euros, after the expense with the sale of the NPL portfolio is subtracted from the profit. The problem is that losses are carried over into the next fiscal years, from one year to the next, until the bank breaks even, with that being a cyclical phenomenon.
     Thus, a bank that posts a profit in a year, in reality doesn't pay any taxes at all, because the posted profit is offset by the losses from the previous years. This is a trick used by banks to avoid paying taxes to the state".
     According to the existing figures, between 2011-2015, out of 46 banks, 19 paid a profit tax, in some of these years, and the others never paid any taxes, our sources said in closing.
     * Sources: "Banks sell the NPLs to a company in which the bank is a shareholder, to an offshore or to a company in which a former manager of the bank is a shareholder"
     Financial institutions sell non-performing loans within the group, (to a company in which the bank is a shareholder), to an offshore or to a company in which a former manager of the bank is a shareholder, the quoted sources told us: "The bank sells 100 million Euros worth of loans to an offshore, for a price of 7 million, with the recovery ratio being 35-40%, and the offshore in question concludes a contract with the bank to continue collecting the payments, paying it a commission of 1.8%. Under these circumstances, the profit of 28 million Euros (35 millions recovered less the 7 paid upon purchase) goes to other countries, doesn't stay here.
     * Hostile takeovers, in Romania
     In Romania, hostile corporate takeovers take place, our sources further told us, who explained: "I have a concrete case to give you - a Romanian company borrowed from a bank. The 14 million Euros loan became non-performing, and the bank sold it, together with the guaranteed assets, for 1 Euro, to a foreign company. The latter turned against the Romanian company to collect its receivable. To avoid foreclosing on the assets and causing the company to go bankrupt, and because the company didn't have cash, the company converted the receivable to stock, taking over a 33% stake in the company, for 2.1 million lei. Thus for one Euro, the foreign company acquired over the 2.1 million lei controlling stake in the Romanian company, in a hostile manner, as the buyer of the receivable thus took over the management of the company, which was listed on the stock exchange.
     The competent institutions should investigate whether banks together with foreign companies have a hostile takeover of Romanian companies. It is a matter of national security, which secret services should be involved in as well".
     * Fraud circuit, through banks
     Banks in Romania represent a vehicle for multinationals to take out money from the country, the quoted sources told us. "Let's say we have the following case: a foreign company in Romania has a subsidiary in Romania. The Romanian company needs money, but doesn't take it directly from its foreign parent, because through «Tranfer Pricing», the difference in interest rates between the market and the one it would borrow the money at, would be taxed. In this case, the foreign company makes a deposit of let's say 100,000 Euros at a bank in the country in question, which has a branch in Romania. The parent bank gives its Romanian subsidiary the 100,000 Euros, in the form of working capital, the Romanian bank gives the bank with a foreign shareholder a 100,000 Euros loan at an interest rate of 10% (higher than the interest rate in the market, because the firm has no way to guarantee the loan). The company in question thus repays 110,000 Euros to the Romanian bank, and the 10,000 Euros interest which is a deductible fee, is booked as a loss for the company and an apparent profit for the bank. But the bank doesn't pay taxes on that money, because it has an expense of 15,000 Euros from the sale of non-performing loans and thus in the end it posts a loss of 5,000 Euros. The Romanian bank pays its parent bank the 110,000 Euros, which means that the 10,000 Euros in interest exits the country without being taxed. Out of that, the foreign bank collects a fee for the services provided, while the rest is collected by the foreign company (the shareholder of the company in Romania) as interest on the deposit, meaning that both foreign entities have a profit in this scheme. In the end, the result is that the company and bank located in Romania post a loss, and the company and bank in other country make a profit. That is a fraud circuit that is done with the help of the banks, presented in a manner as general as possible, because the schemes are a lot more complicated, and the amounts are far bigger".
     The example above was presented by the OECD in the anti-BEPS plan (taxable base erosion and profit transfer), according to the quoted sources.
     In Romania, 95% of the banking system is privately owned, which means that whenever they want, banks can stop the funding of the Romanian economy, the quoted sources warn.
     They stress that in 2009, "we didn't have a crisis; it was induced by withholding funding": "By cutting the credit lines, banks stopped ongoing investments, which meant companies had to finance themselves".
     This also shows that as long as the government will pay high interest rates, banks aren't going to invest their money in the economy, but instead prefer to give it to the state, which offers higher interest rates than in the market. 
 

 
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Aceeasi sectiune (English Section)
AFTER BEING INVESTIGATED BY THE TAX ADMINISTRATION AND THE ANPC, BANKS GET INVESTIGATED BY THE COMPETITION COUNCIL
THE COURT RULED THAT SOME CONTRACTS CONCLUDED BY CELL PHONE COMPANIES INCLUDE ABUSIVE CLAUSES
AFTER THE TRANSACTION BETWEEN BANCA TRANSILVANIA AND BANCPOST
PATRICIA SUÁREZ RAMÍREZ, THE PRESIDENT OF THE ASSOCIATION OF FINANCIAL CONSUMERS OF SPAIN:
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English Section
12.12.2017
AFTER BEING INVESTIGATED BY THE TAX ADMINISTRATION AND THE ANPC, BANKS GET INVESTIGATED BY THE COMPETITION COUNCIL
     * Chirițoiu: "We suspect an exchange of sensitive information on the banking market"
     * Dan Suciu, NBR: "The audits of the Competition Council can't be a reason for panic whatsoever"
     * Unannounced audit at Finmedia
     * The investigated institutions are at risk of being fined 10% of their turnover
     * Vasilescu: "The NBR has nothing to do with these investigations"
       The financial banking system seems to be the focus of most of the investigation entities. After being audited by the National Tax Administration Agency (ANAF) and by the National Consumer Protection Authority (ANPC), some of the banks which operate in Romania have also been investigated by the Competition Council (CC).  details
11.12.2017
THE COURT RULED THAT SOME CONTRACTS CONCLUDED BY CELL PHONE COMPANIES INCLUDE ABUSIVE CLAUSES
     * The Bucharest Court of Appeal Bucharest yesterday ruled that RCS&RDS has abusive clauses in its contracts
     * The ANPC has also won the initial lawsuit against Telekom România
     * Vodafone has lost the case in the court of last instance against the ANPC
       The Courts have decided that some contracts concluded by the telephony companies contain abusive clauses. The Court rulings were rendered last year, as well as in 2016, but the argumentations have been formulated relatively recently.  details
08.12.2017
     The hope of an accession as quick as possible by Romania to the Eurozone was dealt a heavy blow precisely on the National Day.  details
06.12.2017
AFTER THE DRAFT HAD BEEN PUBLISHED IN OCTOBER
     * Gheorghe Șimon: "The royalties law will be voted in the Parliament in February next year"
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     * Daniel Cătălin Zamfir, PNL: "I found out that there are companies that have never, take note, never paid even one leu in royalties to the Romanian state, even though they have been exploiting resources for over 20 years"
     * Last year, the Court of Auditors announced that Romania lost 1.4 billion dollars, because the ANRM established the oil royalties in a flawed manner
       The entire legislative package concerning the regulation of the system for the regulation of the mineral, oil and hydromineral resources will be revised and will be voted in the Parliament in February next year, Economics minister, Gheorghe Șimon, announced yesterday, after the debates of the Economic, Industries and Services Commission of the Senate.  details
28.11.2017
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     * Customers with borrowers in CHF from Bancpost are waiting for a conversion program with a discount
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27.11.2017
     * MAKE, BURSA: "I want the new CEO of the BSE to participate in the drafting of a new strategy for the development of capital market"
       On Thursday night, "BURSA" received the Award for the promoting of high standards of corporate governance on the capital market, as part of the 2017 Capital Market Awards Gala, organized by the Association of Brokers.  details
24.11.2017
     * Ciprian Păltineanu and Adrian Tănase, scheduled for meetings with the board
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     * George Butunoiu is in charge of recruitment
     * The waiting list may include a few foreigners, including former BRD executive Jacek Panczyk
       According to some market sources, banker Ciprian Păltineanu and Adrian Tănase, Chief Investment Officer at NN Pensii România, will hold interviews in the beginning of next week with the Board of the BSE, after Ludwik Sobolewski's term expired in the summer.  details
23.11.2017
PATRICIA SUÁREZ RAMÍREZ, THE PRESIDENT OF THE ASSOCIATION OF FINANCIAL CONSUMERS OF SPAIN:
     * The head of the ASUFIN: "The ruling of the Supreme Court of Spain in which the Andriciuc case has been invoked will be part of the Spanish case law and the lower courts will be required to apply the principle that underlies this decision"
       The ruling issued by the Court of Justice of the European Union (CJUE) in the Andriciuc versus Banca Românească case represents a great advantage for Spanish debtors, said Patricia Suarez Ramírez, the president of the Association of Financial Consumers in Spain (ASUFIN), as part of a response recently sent to BURSA.  details
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       The president of the Chamber of Deputies, Liviu Dragnea, leader of the PSD, thinks that his enemies are hiding behind some institutions, "they crucify people", and the real stake is "the blocking of the Laws concerning the Justice system".  details
21.11.2017
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20.11.2017
ANPC STRIKES AGAIN
     * BCR: "Ongoing contracts no longer contain the clauses that have been subjected to examination"
     * Sources: "ANPC has 6 lawsuits against BCR, which will lead to enormous losses for Erste Bank if BCR loses in court"
       After forcing Raiffeisen Bank to eliminate the unfair practices from the loan agreements, the National Consumer Protection Authority (ANPC) strikes again, this time the biggest bank in the system. BCR lost in the court of first instance, against the ANPC, in a class action lawsuit concerning abusive lending clauses.  details
16.11.2017
THE QUICK RISE OF THE INDEX WHICH SETS THE TREND FOR INTEREST RATES ON LOANS DENOMINATED IN LEI ISN'T STOPPING
     The 3-month ROBOR rate, which is used to calculate the interest rates, the majority of the loans denominated in lei, has jumped past the 2% psychological level, and yesterday reached 2.06%, up from Tuesday's 1.92%, according to data from the NBR.  details
16.11.2017
THE PARLIAMENT IS ASKING FOR INFORMATION CONCERNING THE INVESTIGATIONS WHICH OMV PETROM HAS BEEN SUBJECTED TO
     * Minister Toma Petcu, former ministers Răzvan Nicolescu and Victor Grigorescu, the representatives of the state in the executive structure of OMV Petrom and Mihai Busuioc, the president of the Court of Auditors were heard today in the Investigation Commission
       The executives of OMV Petrom mentioned, in a letter addressed to the parliament, the existence of four lawsuits brought by the National Energy Regulation Authority (ANRE) and of seven audits by the Authority, between 2012-2017, as the recent request for information by the Commission for the Investigation of the activity of the ANRE targeted a period of 12 years, from 2015 to 2017.  details
14.11.2017
THE EURO AT AN ALL-TIME HIGH
     * Vasilescu: "We cannot say that the currency market has gone off the rails, the exchange rate has moved 4 bani in 4 days"
     * "Perhaps it is a simple coincidence the fact that on November 8th was approved the Emergency Ordinance of the Fiscal Code and it was also on that day that the Euro rose past 4.6 lei", said Mr. Vasilescu
       The leu yesterday reached a historic low against the Euro, 4.6495 lei/Euro, up 1.05 over the previous meeting, marking the fourth day where the exchange rate was above 4.6 lei.  details
13.11.2017
     In October, the Romanian Commercial Bank, through Schoenherr și Asociații, has submitted, with the County Court of Bihor, a request for the insolvency of the European Drinks group, owned by the Micula brothers. That group includes: European Drinks, Transilvania General Import-Export, European Food, Starmill SRL, Scandic Distilleries SA, Rieni Drinks.  details
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