Lending at Rietumu: What Is New and Promising?
28-Jan-2019, 14:58 / Products & Services We continue publishing materials on topical issues of the bank’s operation. This article is about current projects of the Lending Department of Rietumu Bank.
As emphasised by the bank executives in their interviews, the development of lending is an important strategic priority of Rietumu Bank in the ‘post-crisis period’. Having retained its quality, the task is to increase the volume of the credit portfolio. The current and intermediate results of this work show that, overall, it is being conducted successfully.
In the second quarter of 2018, we received plenty of new applications and projects, and several dozens of the most qualitative and prospective of them have been accepted. The financing volumes of some projects are estimated to be dozens of millions of euros. By now, financing has been opened for a number of them, whereas for others the process of coordinating details and agreements is being completed.
Thus, we can surely say that the ‘shake’ experienced by the banking market last year did some good, it has opened new opportunities and has increased the attractiveness of Rietumu for customers.
There are two important reasons for this. Firstly, Nordic banks in all Baltic countries currently refrain from servicing companies that have EU non-residents among their shareholders, ‘just in case’. It is true also for normal residential European companies, including local ones, which have accounts opened in these banks. In spite of this, it turned out that they had not matched a certain pattern, which became ‘the bed of Procrustes’ for them.
The logic of our colleagues is clear - customers of such type require a custom-tailored approach and analysis, which is troublesome and expensive. Still, these companies, among which there are a lot of successful and respectable businesses, need financing, which could be provided by independent private banks - they are more flexible and capable of working with non-standard projects. Such banks are certainly available. But, apart from Rietumu, none of them has sufficient resources and capital to cope with credit projects having a volume of over EUR 10 million. And this is the second reason.
Rietumu is now the only big private bank in the Baltics which has capital, experience and expertise, including in servicing international projects. Moreover, we can and want to work with non-standard projects.
The market, in turn, sees and understands everything and reacts correspondingly. We are recommended to partners and contractors of our customers. As a result, within 4-5 months, we received a lot of interesting projects. I will briefly describe some of those that are currently being at different stages of their practical development.
Firstly, we continue one of our traditionally strong activities - real estate projects, both commercial and residential. Among the most interesting projects, there is financing of the construction of the upmarket residential real estate in Jurmala - with regard to the quality, price and ambitions, it will be unprecedented in the Baltics.
We intend to provide lending for the renovation of several historical buildings in the centre of Riga, which will soon be turned into qualitative residential real estate, where the spirit of history and the cultural value will be combined harmoniously with modern ideas about comfort and prestige.
There is a number of new projects, both in Latvia and in Estonia, related to the hotel business - this field is continuing to develop well in the Baltics. Within the framework of these projects, we finance the acquisition, reconstruction, equipping and launching of new hotels, both of tourist and business classes.
Manufacturing. Among the potential customers of Rietumu, there are top manufacturers of equipment and building materials, as well as machine-building, metal working and pharmaceutical companies - they all have export contracts for years ahead and don’t intend to slow down their development rates. The field of logistics is not forgotten by us either.
The previously accumulated experience in crediting non-banking financial structures allows development in this direction as well, not only in Latvia, but also in other countries of the EU. We devote special attention to Estonia and Lithuania.
The possibilities of financing startups in the field of fintech are considered by us as well - this is a promising segment that we are interested in cooperating with.
Currently, a transaction is being processed in the course of which some of the shareholders of a big Latvian company buy out shares of other shareholders against stocks. In our opinion, the number of such transactions will be growing further on and our current experience will help us in the future.
Let me repeat that these are all projects we received less than half a year ago. As before, the quality of the credit portfolio is the focus of attention - we study the businesses of our customers thoroughly and analyse their risks accordingly. This is what we are capable of doing and, therefore, we are open to new projects, including non-standard and innovative ones.
Thank you for your cooperation!
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