Conti Mihai Dan Consultancy Project1

Institut National de Developpement Economique
TABLE OF CONTENTS
I. BRD Groupe Socit Gnrale AND THE ECONOMIC EN IRONMENT 1.1. Short history of BRD Groupe Soci t G n rale!!!!!!!!!!!!..!" 1.#. BRD Groupe Soci t G n rale profile!!!!!!!!!!!!!!!!....$ 1.#.1. Retail %an&in'!!!!!!!!!!!!!!!!!!!!!.!.$ 1.#.#. (orporate %an&in'!!!!!!!!!!!!!!!!!!!!..1) 1.#.*. Ratin's!!!!!!!!!!!!!!!!!!!!!!!!...1" 1.*. Soci t G n rale +rofile!!!!!!!!!!!!!!!!!!!!!!...1" 1.*.1. Retail Ban&in' and financial services!!!!!!!!!!!!!1" 1.*.#. (orporate and investment %an&in'!!!!!!!!!!!!!!1" 1.,. -ey fi'ures of BRD . Groupe Soci t G n rale!!!!!!!!!!!.!!1$ Net %an&in' income!!!!!!!!!!!!!!!!!!!!..!...1$ Gross operatin' income!!!!!!!!!!!!!!!!!!!..!.1/ Net profit!!!!!!!!!!!!!!!!!!!!!!!!!!.1/ Shareholders0 equity!!!!!!!!!!!!!!!!!!!!..!.11 Return on Equity 2R3E4!!!!!!!!!!!!!!!!!!!!.11 1.". BRD Groupe Soci t G n rale share!!!!!!!!!!!!!!!.!....15 1.".1. 6he dividends!!!!!!!!!!!!!!!!!!!!..!..15 1.".#. Stoc& E7chan'e Information!!!!!!!!!!!!!!!!.#) 1.".*. Share capital!!!!!!!!!!!!!!!!!!!!!!..#1 1.".,. Shareholdin'!!!!!!.!!!!!!!!!!!!!!!!## 1.$. 1./. 1.1. !#$ 1.1.1. Balance sheet!!!!!!!!!!!!!!!!!!!!!!!.#$ 1.1.#. Deposits and loans !!!!!!!!!!!!!!!!!!.!!...#/ 1.1.*. +rofit and loss account!!!!!!!!!!!!!!!!!!!...#1 II. III. THE BAN!ING SECTOR"""""""""""""""""""""""#$ THE COM%ETITION IN THE BAN!ING FIELD"""""""""""""&& 8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product? 1 Ris& Standardi9ed Business Results!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 8ana'ement!!!!!!!!!!!!!!!!!!!!!!!!!..#* :ines!!!!!!!!!!!!!!!!!!!!!.#"
Institut National de Developpement Economique *.1. Introduction!!!!!!!!!!!!!!!!!!!!!!!!!!!...** *.#. 6he competitive environment and BRD Groupe Soci t G n rale!!!!!...*, *.*. (onclusion!!!!!!!!!!!!!!!!!!!!!!!!!!!!,1 I . BRD MASTERCARD GOLD CREDIT CARD %ROGRAM ,.1. Bac&'round!!!!!!!!!!!!!!!!!!!!!!!!!!,* ,.#. (oherence of the pro;ect >ith strate'ic orientation of the BRD!!!!!!,, ,.*. @actors tri''ers!!!!!!!!!!!!!!!!!!!!!!!...!,, ,.,. 3%;ectives of the pro'ram!!!!!!!!!!!!!!!!!!!!..," ,.,.1. 3%;ectives for customer!!!!!!!!!!!...!!!!!!!..," ,.,.#. 3%;ectives for the %an&!!!!!!!!!..!!!!!!!!!!," ,.,.*. -ey components of credit card profita%ility!!!!!!!!!!!..,$ ,.,.,. Supplementary o%;ectives!!!!!!...!!!!!!!!!!..!.,/ ,.". Reminder of the conte7t!!!!!!!!!!!!!!!!!!!..!!,/ ,.".1. E7ternal elements!!!!!!!!!!!!!!!...!!!!!!,/ ,.".#. Internal elements!!!!!!!!!!!!!!!!!!!!!!,/ ,.$. Economical and financial issues!!!!!!!!!!.!!!!!!!!,1 ,.$.1. (urrent position!!!!!!!!!!!!!!!!...!!!!!..,1 ,.$.#. Advanta'es of the solution propose!!!!!!!!!...!!!!!,5 ,./. -ey %enefits of the pro'ram!!!!!.!!...!!!..!!!!!.!!!,5 ,.1. (ost and revenue estimation!!!!!!!!!!!.!!!!!!!!..") ,.1.1. Investments costs!!!!!!!!!!!!!!!!!.!!!!..") ,.1.#. Implementation costs!!!!!!!!!!!!!!!!.!!!!") ,.1.*. Estimation of revenues!!!!!!!!!!!!!!!!!..!!."1 . %RO'ECT DESCRI%TION A. E(ecuti)e *u++ar,""""""""""""""""""""""...""""""".-1. +roduct!!!!!!!!!!!!!!!!!!!!!!..!!!!!!!!!!.."$ #. 6ar'et customers!!!!!!!!!!!!!!!!!!!!!!!!...!!!!.."$ *. -ey (ustomer Balue!!!!!!!!!!!!!!!!!!!!!!!...!!!!"$ ,. :oan :osses!!!!!!!!!!!!!!!!!!!!!!!!!!!..!!!.."$ ". (redit :imit!!!!!!!!!!!!!!!!!!!!!!!!!!!!...!!.."/ $. (urrency R3N!!!!!!!!!!!!!!!!!!!!!!!!!!!!..!.."/ /. Interest rate!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!....."/ 1. Annual @ee!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!."/
8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?
Institut National de Developpement Economique 5. (osts of funds!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!"/ 1). Spread!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!."/ 11. (ard duration 2validity4!!!!!!!!!!!!!!!!!!!!!!!!!..."/ 1#. Repayment!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!."/ 1*. (ollateral!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!"1 1,. (redit (riteria!!!!!!!!!!!!!!!!!!!!!!!!!!!!!...."1 1". System Requirement!!!!!!!!!!!!!!!!!!!!!!!!!!!.."1 B. C.aracteri*tic* o/ t.e %ro0ra+ 1. +roduct (haracteristics!!!!!!!!!!!!!!!!!!!!!!!!!!!"5 #. @ees C (ommissions!!!!!!!!!!!!!!!!!!!!!!!!!!!...$) *. +ac&a'e of services attached to the card!!!!!!!!!!!!!!!!!!!!..$1 ,. 8ar&etin' 3%;ectives D +ositionin'!!!!!!!!!!!!!!!!!!!!!!.$# ,.1. 6he card mar&et!!!!!!!!!!!!!!!!!!!!!!!!!!$# ,.#. (ard competition analysis!!!!!!!!!!!!!!!!!!!!!!.$" ,.*. Enique sellin' points!!!!!!!!!!!!!!!!!!!!!!!!$$ ,.,. (ampai'n information!!!!!!!!!!!!!!!!!!!!!!!..$$ ,.". Distri%ution channels !!!!!!!!!!!!!!!!!!!!!!!...$$ ". (redit (ard application process and procedure steps!!!!!!!!!!!!!!!..$$ $. :oan :oss provision!!!!!!!!!!!!!!!!!!!!!!!!!!!!.$/ /. :evels of delinquency!!!!!!!!!!!!!!!!!!!!!!!!!!!..$5 1. Implementation +lan!!!!!!!!!!!!!!!!!!!!!!!!!!!!/) C. Financial a**u+ption* """""""""""""""""""""""""""...12 D. Ri*3*""""""""""""""""""""""""""""""""""".1& E. Depart+ent* concernin0 4, t.e pro5ect"""""""""""""""""""""16
I. BRD Groupe Socit Gnrale and the economic environment

#))1 >as a 'ood year for the Romanian economy. @or the first time over the last ten years inflation declined %elo> 1)FG the li%erali9ation of the capital account in #))5 and the ne> R3: denomination are si'ns of the successful monetary politics applied durin' the last fe> years. 6he economic 'ro>thH in e7cess of 1FH >as the hi'hest in all the European countries. @orei'n direct investments reached a record level of EER ,.* %illionH >hile the 8CA operations e7ceeded EER $)) %illion. A'ainst this favora%le %ac&'round and in the conte7t of RomaniaIs upcomin' accession to the European EnionH the %an&in' sector has continued performin' stron'ly. 6he commercial offer >as diversifiedH the first speciali9ed financial companies >ere createdH and competition sharpened >ith the entry of ne> players on the retail mar&et. BRD . Soci t G n rale Group too& advanta'e of this conte7t and %e'an reapin' the fruits of the in. depth chan'es that this company has %een under'oin' over the last three yearsH in terms of or'ani9ationH >or&in' procedures and investments. 6he net income pro'ressed %y ,)F to reach EER 11./ million. 6he return on equity 2R3E after ta7es4 rose to *)F a'ainst #,./F in #))/H ma&in' BRD the most profita%le %an& in Romania. 6he cost D income ratio >ent do>n %y $ points to ,1F illustratin' an improved productivity. All of the %an& activities have contri%uted to these results. :endin' to corporate customers has lar'ely developed. All mar&et se'ments have %enefited from the %an&0s support< lar'e corporationsH S8Es and very small %usinesses for >hich >e launched specific financin' pro'rams. ""F of the Ban&Is assets are invested in the Romanian economy. 6he retail %an&in' has 'ro>n at an accelerated pace. Numerous ne> products and services >ere mar&etedG BRD >ith the support of Soci t G n rale Group launched BRD @inance (redite de (onsum the first company 'rantin' consumer loans at the point of saleG the distri%ution channels >ere diversified. At *1 Decem%er #))1 BRD had 1,360,000 individual customers. An am%itious pro'ram of openin' ne> %ranches called BRD E7press >as launchedG it tar'ets the most dynamic areas economically and demo'raphically. A first >ave of *5 such %ranches has already %een inau'uratedH and the yielded results are encoura'in'. 6he Ban&Is 'ood performances are also illustrated %y the evolution of BRD shares on the stoc& e7chan'e. 6he avera'e price of the share has increased %y ""F in #))1G the %an&0s stoc& e7chan'e
Institut National de Developpement Economique capitali9ation stood at EER 1H*11 million at *1 Decem%er #))1H BRD ran&in' second amon'st the companies listed at the Bucharest Stoc& E7chan'e. 6here is a success of the 'ro>th model the Ban& has adopted since its privati9ation. 6his model relies on the values that are common to the Soci t G n rale Group >orld>ideH and that our employees have adopted< professionalismH team spiritH and innovationH allo>in' BRD to cope >ith a rapidly chan'in' environment.
1. 1. Short History of BRD Groupe Socit Gnrale

1923 6he National Company for Industrial Lending is created as a pu%lic institutionH >ith the State holdin' #)F of the share capitalH the central %an& *)FH and the rest %ein' held %y individualsH amon'st >hom a 'roup of former directors of 8armorosch Blan& C (o.H the first Romanian modern %an&. 6he mission of this ne> institution is to finance the first development sta'es of the industrial sector in Romania. 1948 After the Second Jorld JarH pursuant to the Nationali9ation :a> of Kune 15,1H the National (ompany for Industrial :endin' passes into the property of the StateH %ecomin' the Investment Credit Bank. 195 After the reor'ani9ation of the financial systemH the Investment (redit Ban& o%tains a monopoly position for the medium and lon' term financin' of all industrial sectors in RomaniaH e7cept for the a'riculture and food industries. It ta&es a ne> name and %ecomes the Investment Ban&. 3ver this periodH the ma;ority of the funds 'ranted %y the Jorld Ban& is mana'ed throu'h the Investment Ban&. 199! 6he monopoles that the speciali9ed %an&s e7ercise in their specific fields of %usiness are over. 6he "omanian Bank for #evelopment is set up as a ;oint venture commercial %an&H ta&in' over the assets and the lia%ilities of the Investment Ban&. It is 'ranted a universal %an&in' license. 1998 In Decem%er is si'ned the sale . purchase a'reement %et>een $o%i&t& '&n&rale and the State 3>nership @und 2the Romanian or'anism mana'in' the State holdin's4 >here%y Soci t G n rale su%scri%es for a #)F increase of the share capital and purchases a sta&e so that its o>nership reaches "1F of the increased share capital ofBRD. 2!!3 6he State 3>nership @und sells to the (B"# 4)99* of BRDIs share capital. 2!! @ollo>in' a re%randin' campai'nH the Romanian Ban& for Development %ecomes B"# + $o%i&t& '&n&rale 'roup. 6he ne> %rand aims to consolidate the Ban&Is position and to render the pu%lic more a>are of the identity of the parent company. 8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product? "
Institut National de Developpement Economique 2!!8 Soci t G n rale pur%,ases t,e residual s,ares held %y the Romanian State at BRDG its o>nership rises from "1F to "1.*#F.
1.2. BRD Groupe Socit Gnrale Profile

BRD . Soci t G n rale Group is the lar'est private %an& and the second %an& in terms of %an&in' assets in Romania. It has the second capitali9ation at the Bucharest Stoc& E7chan'e 2EER 1.* %illion at end #))14. 6he ma;ority sta&e of BRD . Soci t G n rale Group is held %y one of the most important %an&in' 'roups in the Euro 9oneH Soci t G n rale. 6he Ban& carries out its %usiness on three main mar&ets<
1.2.1 Retail banking

6he Ban& has 1H*$)H))) individual customers and more than 1H)))H))) cardholders. It is
one of the leaders
on the %an&in' card and the consumer loan mar&ets. 6he consumer
loans at the point of sale are 'ranted %y its speciali9ed su%sidiaryH BRD @inance (redite de (onsum. 8ar&et shares vary from 1"
to #)F accordin' to products.
6he product and service ran'e e7pand constantlyH driven %y the 'ro>th of the populationIs standard of livin'. Jith more than 1H*$)H))) customers and a lar'e net>or& of #1# %ranches at the end of #))1H BRD has stren'thened its position on the retail mar&et. In line >ith its strate'y of attractin' ne> customersH the Ban& >or&ed on a t>o point plan< to enlar'e its %ranch net>or& durin' the second quarterH consolidatin' its penetration of the areas >ith potential to enrich its commercial offerin'H adaptin' in the same time its interest rate policy to the mar&et. Laun%, of a ne- %on%ept of .ank .ran%,/ B"# (0press1 t,e pro0imity .ank In order to &eep its leadin' position in the mar&et in terms of consumer loansH S8Es lendin'H and other speciali9ed financial servicesH BRD proposes a ne> model of universal %an&< the pro7imity universal %an&H customer oriented. BRD E7press has appeared out of the need to satisfy the needs of the individual customers and streamline the >or&in' procedures and operations specific to retail %an&in'. 6he aim is to familiari9e the pu%lic >ith %an&in'< a %an& has to %e simpleH accessi%leH >elcomin' and close to the customers.
Institut National de Developpement Economique 6he specific features of the ne> %ranches are< pro7imity promptitude streamlined operations 6hese %ranches inte'rate easily into the life of the communityH %ein' located in residential areasH >ithin universitiesH in shoppin' centersH in pu%lic institutions. 6he ne> %ranch concept reflects one of the ma;or directions of the Ban&Is strate'y< placin' the customer at the heart of our %usiness. In a friendly and familiar environmentH >ith universal counters processin' the entire ran'e of current %an&in' operationsH these structures provide a quic& and efficient service. (om%inin' commercial dynamismH pro7imity and hi'h quality serviceH the ne>ly consolidated %ranch net>or& stands as a ma;or competitive advanta'e. Ender a po>erful and reco'ni9ed %randH the Ban& relies on a hi'h.quality net>or& of over #)) %ranchesH coverin' the entire country. 6he %ranch.openin' pro'ram >ill continue over the comin' yearsG the e7istin' %ranches >ill %e moderni9ed so to offer the same service conditions as the BRD E7press %ranches. 2 ne- image in t,e .ran%, net-ork An improved visi%ilityH softer colors and shapesH and a more suita%le layoutH are the main characteristics of the ne> BRD %ranches. 6he interior layout has %een desi'ned to provide a >arm >elcomeG yet it ena%les a hi'h level of confidentiality for each individualIs transactions thus ensurin' a hi'h de'ree of customer satisfaction. In this >ay the pu%lic areas have %een arran'ed in an uncluttered >ay >ith a calmin' atmosphere. A strong penetration of the student market A tar'eted commercial policy underpinned %y an innovatin' offer on the Romanian mar&et has led to a si'nificant pro'ression of the num%er of student customers< in #))1 more than ,)H))) students chose the ne> L(redit 1)L offerin' a loan and a discount pro'ram for purchases at partner retailers.6he student offer >as e7tended to comprise loans adapted to various situations. Numerous commercial and promotional actions >ere underta&en durin' #))1< LBRD Academic ScholarshipsLH mar&etin' events >ithin universitiesH partnership conventions >ith universities. A num%er of / %ranches >ere opened inside the most important university campuses. 6his strate'y met >ith successH BRD 'ainin' the attention of this cate'ory of clientele. 6he development of the 'ood>ill >as also reflected in the consolidation of the Ban&Is presence on the affluent customers mar&et. BRD opened in April #))1 a private %an&in' unitH dedicated to the hi'h net >orth individualsH >ith a dedicated team of speciali9ed advisors.
Loans to individuals Consumer loans: a constant improvement of the offer After t>o years of rapid 'ro>thH the consumer loan mar&et has remained steady over the last yearH despite of a stron' slo>do>n durin' the first quarter. BRD has ta&en a series of initiatives< e7tension of the durationH introduction of loans in forei'n currencyH promotional campai'ns in order to preserve its mar&et share at a hi'h level. Car loans 6he sustaina%le partnership %et>een Dacia Renault and BRDH developed since #)),H had 'ood results in #))1H >ith 1,H))) cars financed. Financing sales In 8arch #))1 B"# 3inan%e Credite de Consum >as created in partnership >ith @ranfinanceH in order to confirm its leadership on the mar&et of consumer loans at the point of saleH in line >ith the European 'ro>th strate'y of Soci t G n rale in this field. In #))1 BRD @inance (redite de (onsum adapted the international @ranfinance platform to the characteristics of the Romanian mar&et for consumer loans at the point of sale. Relyin' on this platform providin' the hi'hest standards in terms customer and supplier servicin'H BRD @inance (redite de (onsum consolidated the traditional partnerships >ith the ma;or retail %rands in Romania such as (arrefourH +ra&ti&erH and Bricostore. At the same timeH BRD @inance concluded a series of ne> partnerships in the home appliancesH I6 equipmentH furnitureH mo%ile phone sectors. Mortgage loans: exceptional growth Benefitin' from a favora%le economic environmentH the real estate mar&et has >itnessed considera%le pro'ress. Bery active on this developin' se'mentH BRD is the only %an& to propose an offer inde7ed to the interest rates applied %y the mar&et 2Euri%or or :i%or4. It re'istered a rise of " F in its mar&et share to 1"." F. Bank %ards BRD preserved its leadin' position on this hi'hly competitive mar&etH e7ceedin' the %enchmar& of 1H)))H))) %an& cards issued. 6he first %an& to propose card lin&ed medical assistance servicesH BRD continued enlar'in' its offer and tryin' to provide each customer >ith a tailored product.
Institut National de Developpement Economique Its ran'e of products include de%it cards in local currency and forei'n currenciesH >ith associated services< insuranceH telephone transfersH direct de%itH invoice paymentH and vacation related services. BRD is the only Romanian %an& to offer this type of service associated to BISA (lassic and 8aster(ard cards. A ma;or concern >as to adapt the %an& card offer to the needs of the different se'ments of customers. 6o this endH Bisa (lassic cards in R3: >ere internationali9edH and insurance and travel services >ere associated to this offer. 6he launch of a 8aster(ard Standard card in EERH offerin' the possi%ility to ma&e payments in EER >ithout conversion e7penses 6o simplify the formalities necessary to o%tain a BRD cardH the Ban& also provides the possi%ility for customers to order their card on.lineH via the institutional site. 4ulti%,annel .ank @or several years already BRDIs services have %een availa%le throu'h various distri%ution channels< %ranch net>or&H A68sH telephone platformH telephone %an&in'H and Internet site. 3n the retail sideH BRD has started in #))/ a pro;ect for the reor'ani9ation of the %ranch net>or& in order to improve the %an& Dcustomer relationshipH and level up the quality of service throu'hout the entire net>or&. In additionH the A68 net>or& >as e7tended to appro7imately ,*) outlets at the end of #))1. Development of remote banking A real source of information on the Ban&Is or'ani9ation and servicesH the institutional site met >ith successH >ith a%out /))H))) visits in #))1H i.e. an avera'e of $)H))) visits per month. 6he site institutional site is under'oin' a process of improvement of the interactive functionalities. Startin' >ith #))1 the customers had the possi%ility to order cardsH arran'e loans and deposits directly on the Internet site. BRD7NET< the leadin' Internet %an&in' service on the Romanian mar&et in terms of the num%er of su%scri%ers. 3nly three months after its launchH BRDIs transactional site had more than ,H))) su%scri%ers. In #))1 BRD8* Call Centre continued attractin' interestH >ith more than "))H))) entry callsG ne> operational functions have %een added< modifications in the a'reementsH transfersH and simulations. In parallelH BRD developed the on.line su%scription for a series of products and servicesH allo>in' its customers to su%scri%e >ithout havin' to visit a %ranch.
1.2.2 Corporate banking

BRD has a stron' e7perience and a reco'ni9ed e7pertise in corporate financin'. It is the first %an& of the Romanian private sectorH %oth S8Es and lar'e corporations. It is present in all the sectors of the economyH supportin' also local communities. Besides the classical financin'H its product and service ran'e comprise cash mana'ementH domestic and forei'n factorin'H and leasin' via it0s the speciali9ed su%sidiaryH BRD So'elease. BRD also plays an important partH to'ether >ith the Soci t G n rale GroupH in the financin' of multinational companiesH %oth @rench and other forei'n companies. In a very competitive mar&etH the Ban& focused on %oth consolidatin' its relationship >ith the e7istin' customersH and on conquerin' ne> ones throu'h a comple7 commercial offerin'. Small and medium sized enterprises 6raditionally the Ban& of small and medium si9ed enterprises in RomaniaH BRDIs o%;ective >as to stren'then its position on this mar&et and on the mar&et of very small %usinesses. 6his clientele se'ment %enefits from dedicated commercial advisors and a division speciali9ed in structurin' specific financin' operations. BRD holds appro7imately ##F of the Romanian small and medium si9ed enterprises mar&etH >ith a%out $)F of its corporate credit portfolio %ein' 'ranted to this se'mentH and the rest of ,)F to the lar'e companies. 6he Ban& re'istered a %alanced e7posure on this se'ment country>ideH in all economic sectors< *1F industryH ,)F trade and servicesH 5F constructionsH "F transportationH ,F a'riculture and 11F others. 6o attain its o%;ectives on this mar&etH the Ban& follo>ed several ma;or directions< moderni9ation of its commercial structures %y creatin' dedicated teams %y customer se'ment and international des&s in the %i' citiesH constant trainin' of the customer advisors and a performin' commercial reportin' system.
Large corporations
A speciali9ed structure is in char'e of the mana'ement of lar'e corporate accounts. Due to a sustained activity in speciali9ed financin' throu'h a series of strate'ic partnerships and a'reements >ith the lar'e private and pu%lic enterprisesH this structure has yielded satisfactory results. In terms of structured financin'H the Ban& carried out structured financin' of ra> materials >ith lar'e 'roups 2RompetrolH 8ittal Side74H it continued its active presence in syndicated lendin' %y participatin' as a co arran'er in the financin' of infrastructures 2(NADNR4H it also 'ranted e7port
1)
Institut National de Developpement Economique credits 2Electrocentrale and the 3rsova Shipyard4 and it participated in privatisations as an escro> a'ent 2Distri'a9 Sud4. 6he >ei'ht of the cross sellin' operations >ith %an& cards increased in #))1 throu'h the a'reements si'ned >ith the lar'e retailers li&e (arrefourH BricostoreH +ra&ti&er. BRD . Soci t G n rale Group is one of the leaders of the mar&et in terms of financin' municipalities. It >as involved as a financin' party in important pro;ects in to>ns li&e +loiestiH +itestiH Baia 8areH DevaH +iatra NeamtH 6ar'ovisteH and Arad. 6he Ban& also financedH often under the Sapard pro'ramH the local administrations of more than #" to>ns for >ater system >or&s and infrastructure development. Constant gro-t, of lending Jith a 'ro>th of appro7imately 1"F in real terms in the credits 'ranted to companiesH the year #))1 produced 'ood results due to the sustained efforts of the commercial teams and a full ran'e of products. 6he stren'thenin' of the team dedicated to lar'e corporate accounts allo>ed an upsur'e of the rhythm on this se'ment >ith a concern to improvin' the ris& quality and preservin' mar'ins. 6ailored financin' formulae allo>ed the Ban& to solve quic&ly the simple and medium value applicationsH and ans>er in a more efficient manner to more comple7 applications
Source: BRD Annual Reports
. 'ro-ing deposits
11
Institut National de Developpement Economique In #))1 the collection of deposits continued the up>ard trend re'istered over the previous years and reported si'nificant pro'ress 2M*$F in real terms4 reachin' EER 1H1,* million at *1 Decem%er #))1. Simfonia 1 investment fund posted ro%ust results durin' #))1H >ith a considera%le success in its relation to enterprisesH %ein' an attractive alternative to classical instruments of treasury mana'ement. Bank Cards Endeavourin' to e7tend the ran'e of products dedicated to companiesH the %an& card offer >as completed in #))1 >ith 8aster(ard Business in EERH accompanied %y assistance and insurance services. 6he e7istin' %usiness card offer allo>s companies to choose the card type that %est suits their needs in terms of internal travels 2R3: cards4 or forei'n travels 2EER or ESD cards4. Cas, 4anagement $ervi%es 8a;or Ldrivin' en'ineL of the %an& company relationshipH capturin' cash flo>s >as a'ain seen as a priority in #))1H the Ban& providin' customers >ith 8ulti7 2domestic cash mana'ement4 service. 6o cope >ith the increasin'ly sophisticated requirements of customersH BRD has launched a ne> version of the 8ulti7 serviceH equipped >ith more functions 2the multiple transfer for instance4. 6his service is presently mar&eted %y modulesH each customer havin' the possi%ility to opt for those functions that %est adapt to their needs. In #))1 >as launched the international cash mana'ement offer >ith So'ecash International S>ift and International 3rders ReceivedH t>o products that stand as the %ase for the future syner'y %et>een the offer of BRD and that of the parent Group in this field. 4arket operations In the course of #))1 BRD consolidated its position on the financial mar&ets. BRDIs mar&et share in terms of fore7 operations moved up from 1)F in Kanuary #))1 to 1$F at the end of Decem%er #))1. 6he volume of the fore7 operations almost dou%led. Ans>erin' in real time to the requirements of the customers >ould not have %een possi%le >ithout an adequate internal or'ani9ation and in this conte7t a 'ood measure >as the introduction of a ne> Strai'ht 6hrou'h +rocessin' type systemH allo>in' the automatic processin' of operations initiated %y the @ront 3ffice. International development
1#
Institut National de Developpement Economique 6he pro'ress of international transactions in #))1 2the total production in equivalent EER >as %rou'ht to EER $.$ %illion from EER " %illionH up #1.1)F a'ainst #))/4 outlines BRDIs special interest for the customers dealin' >ith forei'n trade 2%oth S8Es and lar'e corporations4. +roposin' an inte'rated 6rade Services offer 2documentary creditsH incassoH international 'uaranteesH cheques and 'uarantees4H as >ell as international transfers and Jestern Enion servicesH BRD is offerin' its clientele the professional advice of its team of specialists and the advanta'e of its relationship >ith a%out /,) correspondent %an&s. In #))1 BRD has tried to add more value to the relationship >ith its importin' and e7portin' customersH %y or'ani9in' thematic meetin's >here the advice of the specialists proved useful. 6han&s to the ;oint efforts of the %ranch net>or& and the headquarters teamsH at the end of #))1 the Ban&Is mar&et share relatin' to international operations >as estimated at 1,F. Leasing/ B"# $ogelease 6he leasin' sector >itnessed a considera%le pro'ress 2M#)F4 over the last year. In a sharply competitive environmentH the reduction in the customer0s conditionsH dou%led %y a rise of e7pendituresH resulted in a fall of leasin' operations mar'ins. Not>ithstandin' this conte7t and due to the professionalism of the sellin' forceH the leasin' su%sidiary 2in its *rd %usiness year4 has yielded more than satisfactory results. 6he leasin' contracts concluded last year amounted to EER 51 million compared to EER "$ million in #))/ 2up /"F4. 6he a''re'ate outstandin' rose to EER 11# million a'ainst EER $# million in #))/ 2up 11F4. Jith a mar&et share estimated at 1,.1FH BRD So'elease ran&s amon'st the first three leasin' companiesH su%sidiaries of %an&s or financial institutionsH in terms of concluded contracts. Ender the slo'an Linnovate and ima'ineLH the leasin' offer diversified 2allo>in' for the specific features of the Romanian mar&et4< simple rental >ith or >ithout service . Servier :a%oratoriesH DanoneH Romtelecom rental of I6 mo%ile equipment Alcatel financin' of sales >ith the local importers . A. Bavaria 28AN4H Ban Ji;& 2DA@4H6erra 2K(B4H +rotruc& 2Iveco4H Autorom 28ercedes. Ben94 su%.rental . Eurial 2+eu'eot4 financin' of pu%lic ris& 2investments in %uses for the municipalities4 real estate leasin' +ra&ti&er medical leasin' Euromedic 6he portfolio of financed equipment is increasin'ly diversifyin'. Althou'h heavy machines 2#/.1F4 and the motor cars 2*$.,F4 account for more than $)F of the financin'H BRD is %y far the leader in the industrial sector 21$F4. 6he construction 2/.*F4 and medical sectors 2$.,F4 are %ecomin' increasin'ly opportune. 3a%toring
1*
Institut National de Developpement Economique 3ver the course of #))1H in the conte7t of a 'enerally soft factorin' mar&etH BRDIs factorin' operations proved sustaina%le and the Ban& ran&s first on this mar&et. 6he factorin' turnover amounted to EER 1#1 million compared to EER ,* million in #))/H i.e. a rise %y #11F. An intense commercial activityH a more efficient cooperation >ith the %ranch net>or& and >ith the e7ternal correspondents have contri%uted to these satisfactory results. Domestic factorin' that came to enrich the Ban&Is offer has met >ith success on the mar&etH %ein' pac&a'ed >ith services to ans>er the various needs of companies. 6husH ne> customers >ere attracted and the processed cash flo>s re'istered an up>ard trend. Due to the quality of service offered to corporate customersH the efficiency of its mar&etin'H the development of its domestic transactions and of the e7ternal operations in close cooperation >ith the lar'est >orld factorin' net>or& . @actors (hain International . have %rou'ht BRD since 3cto%er #))1 the status of a fully fled'ed mem%er of this presti'ious or'ani9ation. BRD is currently the only Romanian %an& havin' this status. 3inan%ial investment servi%es BRDIs su%sidiary B"# Corporate 3inan%e ran&s amon'st the leaders of the consultin' companies on the Romanian mar&etH active in fields such as the privati9ation of companiesH mer'ers and acquisitions and investments. BRD (orporate @inanceIs traditional customers >ere multinational companies or the pu%lic institutionsH %ut recently more and more Romanian enterprisesH in their ma;ority clients of the Ban&H turn to BRD for assistance in restructurin'H e7pansionH financin' operations and partnerships. 6he development of the cooperation >ith the :ar'e (orporations Division has once more turned to 'ood account the syner'y %et>een the different %usiness lines of the Ban&. B"# $e%urities has stren'thened its leadin' position on the Romanian %ro&ers mar&et. 6he hi'h quality of its research and of its services in 'eneral have allo>ed BRD Securities to %e the natural choice of lar'e international clientsH the su%sidiary %ein' the mar&et leader in terms of transactions performed %y the forei'n investors in Romania. BRD Securities is also very active in financin' operations via %ond issues for lar'e companies 2BRD included4 and for municipalities. RecentlyH due to a ti'ht cooperation >ith BRDIs %ranch net>or&H BRD Securities attracted a local up.mar&et clientele active on the stoc& e7chan'e. In #))1 BRD Securities o%tained a very 'ood profita%ilityH ran&in' second amon'st the %ro&ers in terms of the num%er of transactions
1,
1.2. Ratings:
3it%, IBC2 $,ort term foreign %urren%y de.t 33 Long term foreign %urren%y de.t BBB $upport 2 Long term rating perspe%tive $ta.le 4oody5s Long term foreign %urren%y de.t B1 3inan%ial strengt, perspe%tive 6ositive
3. Socit Gnrale Profile

Soci t G n rale Group is one of the leadin' financial services 'roups in the Euro 9one and one of the most important @rench companies %y its stoc& e7chan'e capitali9ation 2EER **.1 %illion at *1 Decem%er #))14. In #))1 the Group yielded a 'ross %an&in' product of EER 1$., %illion and a net result of EER *.1 %illion. It employs 5#H))) people >orld>ide in three core %usinesses< 1. .1 Retail !anking and Financial Ser"ices N N1 amon'st the non.mutual retail %an&s in @rance %y its turnover and num%er of %ranches 2#H/*) %ranches of Soci t G n rale and (r dit du Nord4. 6he num%er of individual customers 21$., million in @rance and >orld>ide4 has increased %y appro7imately /.1F compared to *1 Decem%er #))/. 6he international retail %an& serves customers. 3ver the past yearsH the Group has e7tended throu'h e7ternal and internal 'ro>th its retail %ranch net>or& in (entral and South.East EuropeH namely in RomaniaH Bul'ariaH GreeceH SloveniaH Slova&iaH (9ech Repu%licH Ser%ia and Russia. 8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product? 1"
million customers in *) su%sidiaries coverin' #1 countries. It
operates as a universal %an& providin' a complete ran'e of services to %oth individual and corporate
1. .2 Corporate and #n"estment !anking SG (orporate C Investment Ban&in' 2SG (IB4 incorporates the financial and investment %an&in' activities *rd corporate and investment %an& in the Euro 9one %y its pre.ta7 profits Reference %an& in its * areas of focus< Euro capital mar&etsH derivative products and structured financin' "atings for Socit Gnrale Group 227 8$tandard 9 6oor5s: 2a2 84oody5s: 227 83it%,:
1.4. Key Figure of BRD Groupe Socit Gnrale

6he net %an&in' income pro'ressed %y #"F compared to #))/H standin' at R3: 1)H111 %illion. 6he 'ross operatin' income is R3: "H$#1 %illionH than&s to an efficient mana'ement of the costs that have %een maintained at 1*F. 6he ris& related costs 2R3: /1/ %illion4 >ent do>n %y 1"FH in real terms.
1$
1/
11
1.!. BRD Groupe Socit Gnrale Share

BRDIs shares have %een listed in the first tier at the Bucharest Stoc& E7chan'e since 1" Kanuary #))". In #))1H the total value of BRD0s shares traded at the stoc& e7chan'e dou%led compared to #))/. 6he transactions >ith BRD0s shares accounted for 1.*F of the a''re'ate value of all transactions carried out on the stoc& e7chan'eG >ith a capitali9ation representin' 1".#F of the total capitali9ation of the mar&etH BRD ran&s second amon'st the companies listed at the Bucharest Stoc& E7chan'e. 6he avera'e price of the sharesH e7pressed in R3:H increased %y ""F in #))1H and in EER %y ,,F a'ainst the avera'e of year #))/.
1.5.1 $he di"idends 6he ta%le %elo> illustrates the evolution of the dividend paid over the last three years.
Source: BRD Annual Reports 2O4 After the employees participation in the %enefit 2until #))$4H constitution of the le'al reserve 2until #))/4 and of the credit ris& reserve D 'eneral %an&in' ris& reserve
2OO4
At *1 Decem%er #))$ the Ban& had $5$H5)1thousand shares. @ollo>in' the General Assem%ly resolution of 1/ Decem%er #))$H the num%er of
shares has %een increased from $5$H5)1thousand shares to 1H*5*H1)* thousand sharesH effective from the %e'innin' of #))/.
15
1.%.2 Stock &'change #nformation 6he ta%le %elo> illustrates the evolution of the main stoc& e7chan'e indicators over the last three years. %ase < IAS BNR
Source: BRD Annual Reports 2O4 6o %e compara%leH the profit per share and the net asset per share of #))$ have %een recalculated accordin' to the num%er of shares e7istin' at the end of Decem%er #))/ and Decem%er #))1. 2OO4 At *1 Decem%er #))$ the Ban& had $5$H5)1thousand shares. @ollo>in' the General Assem%ly resolution of 1/ Decem%er #))$H the num%er of shares has %een increased from $5$H5)1thousand shares to 1H*5*H1)* thousand sharesH effective from the %e'innin' of #))/.
#)
At *1 Decem%er #))1 the stoc& e7chan'e capitali9ation reached R3: "#H))) %illionH compared to R3: #1H))) %illion at end #))/.
#1
1.%. Share capital At *1 Decem%er #))1 the BRD capital share stood at R3: ,H111H,)1H),)H))) and comprised 1H*5*H1)#H$1) shares 2the same num%er as at *1 Decem%er #))/4 >ith a nominal value of R3: *H))) each. 6hese sharesH fully paid.inH are nominal. No chan'e has occurred >ith respect to BRD0s shares in #))1.
1.%.( Shareholding At *1 Decem%er #))1H the shareholdin' structure . identical to the votin' ri'hts structure . >as as follo>s<
##
1.". Ri # $anagement
BRDIs ris& division >as consolidated in #))1 and it e7tended its scope of operation. (oordinated directly %y the (hairman C (E3H its o%;ective is to supervise the entire ran'e of ris&s< the liquidity and solvency policy in cooperation >ith the @inancial Department the credit ris&s >ith a vie> to maintainin' a %alanced portfolio %y economic sectors.
#*
Institut National de Developpement Economique 6he Ris& Division is also involved in the trainin' of the commercial credit ris& analysts the mar&et ris&s thatH in the conte7t of the 'ro>th of the interest rate instruments and forei'n currency operationsH require a ti'ht monitorin' the operational ris&sH >ith the implementation of a Business (ontinuity +lan for the head offices and the %ranches. In case of events preventin' continuation of the Ban&Is activity in the present premisesH %ac&. up centers have %een preparedH >ith adequate and properly tested equipment. In order to alleviate the credit ris&sH the Ban& %alanced them %et>een the different sectors. At *1 Decem%er #))1H the sectors >ith the hi'hest e7posures in the a''re'ate commitments >ere the follo>in'<
Source< BRD Annual Reports
#,
(redit ris& (redit ris& represents the lossH >hich the Ban& >ould suffer if a client or counterparty fails to meet its contractual o%li'ations. 6he credit ris& is inherent in traditional %an&in' products . loansH commitments to lend and other contin'ent lia%ilitiesH such as letters of credit .and derivative contracts. 6he Ban& restricts its credit e7posure to %oth individual counterparties and counterparty 'roups %y usin' credit limits attri%uted >hen the client is rated %y the Ban&. 6he si9e of limit depends on the assessment of quantitative factors such as their financial stren'thH industry positionH and qualitative factors such as quality of mana'ement and shareholders structure. 6he e7posure is monitored a'ainst limits on a continuous %asis. 6he Ban& 'rants loans to individuals %ased on a scorin' system that is on'oin' validated. @orei'n e7chan'e ris& 6he forei'n e7chan'e ris& is the ris& of loss resultin' from chan'es in e7chan'e rates. 6he Ban& mana'es the forei'n currency ris& %y usin' limits for the opened forei'n currency positions %oth %y currency and at the level of 'lo%al forei'n currency position 2more restrictive than the ones imposed %y the National Ban& of Romania4 and %y daily monitorin' of BaR ratio 2Balue at ris&4 on the forei'n currency position. Interest rate ris& Interest rate ris& is the ris& of loss resultin' from chan'es in interest rates. It is controlled primarily throu'h the monitorin' of the structureD'aps of assets and lia%ilities %y maturity ran'esH respectively %y usin' a sensitivity limit of the %alance sheet structure to the interest rate ris&. :iquidity ris& 6he liquidity ris& is associated either >ith the difficulty of an enterprise to raise necessary funds in order to meet commitments or >ith its ina%ility to reali9e a financial asset quic&ly and for an amount close to its fair value.
#"
1.%. Standardi&ed Bu ine
'ine
Different pro'rams of moderni9ation of the I6 equipment and processes >ere launched and carried out in #))1 in an effort to diminish costs and increase the quality of service. In terms of or'ani9ationH several ma;or directions >ere considered< assist the commercial efforts of the %ranch net>or& %y creatin' re'ional %ac&.offices in char'e >ith processin' the administrative operations for the various client cate'ories< customer service for individualsH and %an&in' service for companiesG a decisive step in improvin' the quality of customer service >as the creation of the universal counterG it started %ein' massively implemented throu'hout the %ranch net>or& mid #))1H a process that >as finali9ed at the %e'innin' of #))5G to continue the streamlinin' of the structures in head office< to this endH the %ac&.offices and the support functions under>ent a series of chan'es in terms of parameters and optimi9ation of functionalities >ith a vie> to constantly improve their support for the entire Ban&. 3n the information technolo'y sideH year #))1 >itnessed a %etter inte'ration of the various activities in the central I6 system 2international operationsH internal accountin'H and ne> products4. A num%er of specific pro;ects >ere finali9edH aimin' at continuin' the automati9ation of the processin' operations and improvin' customer service 2a %etter account D card lin&H %ac&.office mar&et operationsH transfers %et>een accounts etc4.
#$
1. . R!S"L#S
Satisfactor) performances In #))1 all of the Ban&Is %usiness lines yielded satisfactory results. 6his performance illustrates BRDIs capacity to ta&e advanta'e of the syner'y of its different %usiness linesH in en effort to consolidate its position on the mar&et. 6he operatin' results pro'ressed si'nificantly< 'ross operatin' income rose %y */F in real termsH tri''ered %y a net %an&in' income up %y #"FG operatin' costs >ere >ell monitored 2M1*F4 and the current profit %efore ta7 2R3: ,H511 %illion4 increased %y "1F. 6hese 'ood results are paralleled %y a consolidated financial structure of the GroupH >ith the (oo&e ratio standin' at 1$.,FH and the R3E at *)F.
1.*.1. !alance sheet 6he total %alance sheet at the end of #))1 represents R3: 11/H#," %illion 2EER #H5"$ million4H i.e. a rise in compara%le terms %y *#F over the previous year. In #))1 the %uildin's and land >ere su%;ect to re.evaluation %y an independent e7pert >ith international reputationH resultin' in a R3: 1/1%illion increase. 6he (oo&e ratioH calculated accordin' to the conditions imposed %y the National Ban& of RomaniaH >as 1$.,F at *1 Decem%er #))1H i.e. , points a%ove the minimum level esta%lished %y the la> 21#F4.
#/
1. .$. Deposits an% loans

At *1 Decem%er #))1 the total loans 'ranted to the customers amounted to R3: $$H,#/ %illion 2EER 1H$/" million4H up #*F in real terms compared to the previous year. 6he loans 'ranted to individual customers re'istered a positive trend reachin' *#F in the total loans at the end of the year. 6he customer deposits at *1 Decem%er #))1 amounted to R3: 1"H,#/ %illion 2EER #H1", million4H up #1F in real terms a'ainst #))/.
#1

1. .&. 'rofit an% loss account

In #))1 the net %an&in' income 're> %y #"F in real terms. 6he %an& char'es related income >ent up ##F in real termsH >hilst the commissions and fees accounted for **F of the total net %an&in' income. 6he pro'ress of the operatin' e7penses >as limited to 1*F in real termsH the main reason %ein' the development of the commercial activity< enlar'ement of the %ranch net>or&H advertisin' campai'nsH 'ro>th of volumes. A%out 1." points of this pro'ress is due to IAS 15 2social lia%ilities4 %ein' applied for the first time. 6he net ris& cost >ent do>n in #))1H after the rise of #))/ 'enerated %y the application of the ne> instructions of the central %an& effective as of Kanuary #))/ and despite the si'nificant increase of lendin'. 6he >ei'ht of %ad loans in the total loans of the %alance sheet declined from #.#F in #))/ to 1.,F in #))1. 6he #))1 net profit came out at R3: *H"5/ %illionH i.e. a rise %y ,)F in real terms compared to #))/. 6he return on equity 2R3E4 stood at *)F.
#5
II. THE BAN!ING SECTOR

6he %an&in' system is the most important se'ment of the Romanian financial systemH its assets accountin' for */./ percent of GD+. In #))1H the main *tructural c.an0e* >ere the follo>in'< - 6he decision of the Romanian 'overnment to finalise the B(R privatisation this year. 6he 'overnment >ill sell at least ") per cent plus a share of the B(R shareH the %an& >hich accounts for #$ per cent of the %an&in' assets in our country. A first step to>ards the privatisation of B(R too& place in #))/H >hen the Romanian state sold #" per cent plus t>o shares to I@( 2International @inance (orporation4 and the European Ban& for Reconstruction and Development 2BERD4 for ESD ### 8H %utH %ecause of the lac& of offersH this attempt failed. 6he 'overnmentH >hich still has a share of *$.1 per cent at B(R >ill %uy %ac& the shares held %y the I@( and BERD in order to ma&e up a ma;ority shares0 pac&a'e >hich >ill %e sold to a strate'ic investor. Interested parties include Banca IntesaH Deutche Ban&H +NB +ari%asH @ortisH @rench.Bel'ian %an& De7iaH Banco (omercial +ortu'uesH Erste Ban&H -B( 2Bel'ium4H. National Ban& of Greece. . 6he privatisation of (E( these months. 6he sale contract of the ma;ority sta&e in the (E( may include clauses re'ardin' the maintenanceH for a certain periodH of the %an&0s unit net>or& and %rand. A staff cut of 1")) >ill %e performed from a total 5,)) employees. Interested parties for (E( are< Raiffaisen Ban&H E@G Euro%an& Er'asiasH 36+ Ban&H Banca 8onte dei +aschi di SiennaH De7ia Ban&H Erste Ban&H National Ban& of GreeceH Societe Generale. . 6he ta&eover of ma;ority holdin's of Banca 6iriac %y PBB and the mer'er %et>een PBB and Enicredito. - licensin' of t>o ne> %an&sH speciali9in' in housin' loans 2Raiffeisen Banca pentru :ocuinte4 and motorcar purchase 2+orsche Ban& Romania4G - re.entry on the Romanian mar&et of An'lo.Romanian Ban& :imitedH >hich resulted from the mer'er throu'h a%sorption >ith the %ranches of @ran&furt Bu&arest Ban& A.G. and Banque @ranco.Roumaine S.A. @ollo>in' the a%ove.mentioned developmentsH credit institutions operatin' in Romania totaled ,) 2includin' (REDI6(33+H the only credit co.operative net>or& licensed so far4H of >hich *) had ma;ority forei'n capital. Concentration of the %an&in' system remained at a level compara%le to that of EE 8em%er StatesH >ith top.five domestic %an&s holdin' a%out $) percent of total assets. 8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product? *)
Institut National de Developpement Economique Capitali9ation of the %an&in' system rose %y a real 1#." percent on the yearH due to %an&s0 meetin' the minimum requirement of R3: */) %illion in o>n funds %y *1 8ay #))1 and to the effects of the stron'er domestic currency a'ainst the euro. 6he performance of pro/ita4ilit, in:icator* of the Romanian %an&in' system stren'thened year on year. 6husH return on equity 2R3E4 >as flat at 1".$ percentH return on assets 2R3A4 stood at # percentH and the a''re'ate solvency ratioH al%eit declinin' to #).$ percent from #1.1 percentH remained >ell a%ove the minimum level of 1# percentH in spite of the si9ea%le increase in non.'overnment credit. At end.#))1H the &ey in:icator +ea*urin0 cre:it ri*3 calculated as the share of loans classified under =dou%tful? and =loss? in total loan stoc& %ottomed out at #.1" percentH the lo>est readin' since the comin' into force of Re'ulation No. "D#))$ issued %y the National Ban& of RomaniaH as amended and supplemented %y Re'ulation No. /D#))$. It should %e pointed out that the quality of the assets portfolio improved a'ainst the %ac&'round of a sturdy rise in lendin' 2#$.# percent in real terms4. Po>everH the 'ro>th rate of lendin' in real terms slo>ed from a year earlierH >hen it had run at ,1." percentH due most li&ely to the comin' into force of Norms No. 1"D#))/ issued %y the National Ban& of Romania on miti'atin' consumer credit ris& and of Norms No. 1$D#))/ issued %y the National Ban& of Romania on miti'atin' mort'a'e credit ris&. 6he share of real.estate and mort'a'e loans in total retail credit increased to #1., percentH from #".$ percent in #))/H >hereas consumer credit still accounted for nearly t>o.thirds of total retail credit. 6he fast year.on.year rate of increase of forei'n e7chan'e non.'overnment credit has %een a matter of concernH o>in' to the ris&s associated >ith the mismatch in currency composition of %an&s0 assets and lia%ilities. (onsiderin' the increasin'ly ti'ht interdependence %et>een the constituents of the financial sectorH a ne> department >as esta%lished >ithin the National Ban& of RomaniaH the @inancial Sta%ility DepartmentH >hose main responsi%ility is to monitor systemic ris&s. As re'ards the re'ulatory frame>or&H the ma;or achievement of #))1 >as the passin' of :a> No. *1#D#))1 on the Statute of the National Ban& of Romania. 6hereforeH :a> No. 1)1D1551 >as amended and supplemented in order to comply >ith the provisions of (hapter 11 =8onetary and economic union? in the acquis communautaireH namely< 2i4 2ii4 2iii4 2iv4 clearly statin' that the o%;ective of the National Ban& of Romania is to ensure and maintain price sta%ilityG stren'thenin' of the central %an&0s institutionalH personal and financial independenceG prohi%ition of direct financin' of the pu%lic sector %y the central %an&G prohi%ition of privile'ed access of the pu%lic sector to the resources of financial institutions.
*1
Institut National de Developpement Economique 8oreoverH the +arliament of Romania enacted :a> No. ,,*D#))1H amendin' and supplementin' :a> No. "1D15516he Ban&in' Act. 6he ne>ly.enforced piece of National Ban of Romania le'islation >as su%;ect to harmoni9ation >ith the provisions of EE Directives in the field as re'ards< - clarifyin' the relations %et>een EE and non.EE credit institutionsG - removalH upon Romania0s accession to the EEH of the requirements on command of the Romanian lan'ua'e and on education for forei'n mana'ers of credit institutionsG - for'oin' the assessment of the licensin' application su%mitted %y a credit institution in terms of the conditions rulin' in the mar&etG - introduction of clear provisions on the minimum level of initial capital. 6he le'islation 'overnin' the Ban& Deposit Guarantee @und >as also su%;ect to appro7imation >ith EE.>ide le'islation. Government 3rdinance No. *5D155$ >as amended and supplemented %y :a> No. 1/1D#))1H >hich sets forthH amon' othersH the follo>in'< - e7pansion of the 'uarantee scope %y includin' the deposits of some le'al entities into the @und0s deposit protection schemeG - increase of the covera'e limit per depositorH from EER $H))) in #))1 P# to EER #)H))) as from 1 Kanuary #))/G - cut in annual contri%utions paid to the @und %y credit institutionsH from )." percent of total 'uaranteed deposits in #))5 to ).* percent in #))/. 3ver the course of #))1H the National Ban& of Romania preparedH alon' >ith 6rans@onD ;oint. stoc& companyH the 'round>or& for the commissionin' of the Electronic %a,+ent S,*te+ 2E%S4 in the early months of #))5. 6he E+S consists of three main componentsH namely real time 'ross settlement system 2R6GS4H automated clearin' house 2A(P4H and 'overnment securities re'istration and settlement system 2GSRS4. 6he up.to.date soft>are >as desi'ned %y an international consortium led %y the Italian company SIAH it >as funded %y the EE0s +PARE pro'ram and co.financed %y the Romanian %an&in' system. Epon implementationH the E+S >ill ensure that three o%;ectives are achievedH as follo>s< 2i4 2ii4 2iii4 to reduce nota%ly the transaction and settlement cyclesG to cut su%stantially the costs related to funds transfers and settlementsG and to create favora%le conditions for its %ein' connected to the 6rans.European automated real.time 'ross settlement e7press transfer system 6ARGE6 after Romania0s accession to the EE. In order to set the E+S in operationH the National Ban& of Romania en'a'ed in numerous re'ulatory and contractin' activities. @urthermoreH a ne> department >as esta%lished at the Romanian central %an&H i.e. +ayments DepartmentH >hich is responsi%le for monitorin' real.time settlement. 8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product? *#
Residents0 access to accounts a%road has %een li%eralised BNR Administration Board approved the li%eralisation of residents0 access to openin' current accounts and deposits accounts a%road. 6his measure >ill contri%ute to miti'atin' R3: appreciation pressures and it is a ne> sta'e >ithin the accomplishment of full converti%ility of national currency. 6he li%eralisation schedule of the capital account a'reed >ith the European Enion provides for full converti%ility to %e reached on Septem%er 1H #))$H once >ith liftin' restrictions related to operations >ith money supply instruments. In order to slo> do>n the advance of lendin' in forei'n currenciesH BNR restricts loan access. 6he National Ban& of Romania ne> norms to %e enforced as of Septem%er #$H provide for limitin' fore7 loans 'iven %y commercial %an&sH to ma7imum *)) percent of the %an&0s o>n funds or the initial capital o>ned %y each lendin' institution. Re'ardin' this situationH as BRD Groupe Societe Generale chairman and (E3 said< =BRD >ill &eep 'ratin' forei'n currency loans %ecause the volume is still %elo> the limits imposed %y NBR. BRD >ill perhaps %e more selective than it has %een until no>?. 2Bucharest Business !ee , "cto#er 03, $00%4
**
III.
3)1) Introdu%tion
THE COM%ETITION IN THE BAN!ING FIELD
In the last yearsH the competition in the %an&in' field stron'ly increased. Sale of the last %an&in' assets held %y the Romanian StateH namely the Romanian (ommercial Ban& and the national Savin's Ban& turns year #))5 into a milestone in the history of the Romanian %an&in' systemH since 1551 >hen the last %an&ruptcy >as reported in the system. After the increases reported in %an&in' assets and territorial net>or&sH the Romanian %an&in' assets is no> >itnessin' sur'in' interests in acquisitionsH the country %ein' particularly interestin' since it is t>o years a>ay from accession in the EE. An acquisition operated at this moment in the Romanian %an&in' system offers investors an opportunity to e7pand to (entral and Eastern Europe at relatively lo> costsH >hile inte'ration time >ill find them in a favoura%le position in terms of mar&et shares. 6he 'lo%alisation tendencyH evident in all European mar&ets 2e.'. throu'h the PBB Enicredito mer'er4 is reflected in the Romanian mar&et as >ellH an e7ample in this respect %ein' the PBB 6iriac Ban& mer'er. 6he conver'ence of the three %an&in' institutions in the Romanian mar&et >ill result in a %an& ran&in' fourth in the system in terms of assets. 6he Romanian %an&in' system is also attractive to investorsH as it is a sector the %est prepared to meet EE accession requirements. Jhile economic 'ro>th remains hi'h ,.1 per cent pro;ected for #))5H compared to only 1." per cent in the Euro 9one the 'ro>th potential for the %an&in' industry is multiple. In the past t>o yearsH %an&s 're> a%out three times as fast as the overall economy and this trend is li&ely to continue. 6he main driver is still the rapidly e7pandin' corporate %usinessH %ut the retail %usiness ta&es a more and more si'nificant role.
*,
Institut National de Developpement Economique 3)2) ;,e %ompetitive environment and BRD 7 Socit Gnrale Group 6he analyse of the competitive environment is carried out accordin' to %orter;* *c.e+eH ad;usted to the %an&in' environment.
(ustomers (ustomers 6he 6he state state treasury treasury
3ther 3ther %an&s %an&s in in competition competition
BRD BRD Group Group Socit Socit Gnrale Gnrale 6he 6he state state Ne> Ne> %an&s %an&s
3ther forms of savin'
:et0s analy9e the co. factors< 6he other %an&s in competition As much as all the other fields of activityH the financial and %an&in' system in Romania has %ecome a fully developin' competitive environment. Jithin this competitive environmentH a lot of pro%lems may %e identifiedH %esides the %an&ruptcy of some %an&s. Several ma;or players are stron'ly competin' in the Romanian %an&in' field< Romanian %an&s< B(R the lar'est state %an&H %ut havin' also #"F participation from BERD and @8I. 6he National Savin's Ban& Banca 6ransilvania (arpatica Ban& 8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product? *"
Institut National de Developpement Economique Rome7terra Ban&
@rench Ban&s< BRD Groupe Soci t G n rale Dutch %an&s< ING ABN A8R3 Austrian %an&s< Raiffeisen Ban& PBB C Enicredito Gree& Ban&s< Bancpost National Ban& of Greece includin' the former Banca Romaneasca Empori&i Ban& the (ommercial Ban& of Greece Alpha Ban& +iraeus Ban& 3ther important %an&s< (iti%an& @inans%an& Sao +aulo I8I Banca Dae>oo 6he most important competitors for BRD are Romanian (ommercial Ban& and Raiffeisen Ban&H due to their close profileH %ut as a very interestin' characteristic of the Romanian %an&in' mar&etH it is important to notice that all the other %an&s have si'nificant plans for the future and are >illin' to compete on all the mar&et se'mentsH e7tendin' the %ranch net>or& and offerin' a lar'e num%er of services not only to the corporate %ut also to the individuals. No>H the tou'hest competitor for BRD from the point of vie> of its %ranch net>or& and %an&in' activity is the Romanian (ommercial Ban&. Raiffeisen Ban& is no> in full development. 6he Savin's Banc 2(E(4H >hich has an e7tensive %ranch net>or&H has lost the trust of many its customers due to its involvement in the @NI 2National Investment @und4 scandal. 6he competition of forei'n capital Romanian %an&s 2ING Ban& and ABN A8R34 is encroachin' >ithin lar'e citiesH especially in the field of %an&in' products and services for corporate customers. 6he mar&et for individual customers has not %een developed %y these %an&sH yet.
*$
In order to analy9e the position of the BRD on the %an&in' mar&etH >e can ma&e the follo>in' comparisons< Ban# B,R BRD Rai22ei en ,/, (B4 (mro .4G Banc6o t 5ther Ban# 8otal $ain hareholder ( et 2))% Romanian State- .F,- B/RD 4-224 GSG 1-+0) R3B "+! Romanian State 1-)04 (B4 ($R5 "+! .4G ")) /FG /uro7an# !!! 0-+0+ 10-4!1 * 2))% ( et 2))+ 01.4)* 4-0)! 10.")* 1-14" !.)1* 1-)!+ %."1* 1!0 !.)1* %!4 4.4"* "0) 4.10* "1+ 2+.!0* 4-0%) 1)).))* 14-"04 * 2))+ 21.42* 10.21* %.20* ".!1* !.1!* 4.01* 4.22* 21.+"* 1)).))*
*/
Source< @inancial Revie>
4arket $,are + Net assets 7 2!!9 6osition Bank 1 B,R 2 BRD 0 Rai22ai en 4 9:B ! ,/, " .4G % (B4 ($R5 + Bancpo t 1 (lpha Ban# 1) 8ran ilvania Ban# 11 Banca Romanea ca 5ther 7an#
Source: &inancial Revie'
4arket s,are 8*: 2".1 * 10 * 1.2 * %.! * !.1 * !."2 * 4.1% * 4." * 0.1+ * 0* 2.4* 1".10 *
*1
Source: &inancial Revie'
Nu+4er o/ car:* Dec. #<<=.
Source: '''(no)cash(ro
*5
Institut National de Developpement Economique Total )alue o/ tran*action* Dec. #<<=
Source< @inancial Revie>
3ther forms of savin' In other countries there are more >ays of savin'sH %esides %an&sH of >hich the most important are< the Stoc& E7chan'eH the insurance mar&etH unit trusts. In RomaniaH the activity of the Stoc& E7chan'e is still randomH and its operations are more speculative than adequate as a savin's instrument. 6his fact is supported %y the evolution of the Stoc& 8ar&et inde7. 6he Stoc& 8ar&et inde7 has %een ran'in' over 1H))) in one year. 3n the other handH in the past fe> yearsH inflation has diminished the inde7H due to its hi'h rates. 6husH people >ho are not >ell acquainted to economics or >ho do not =feel? the mar&et cannot invest their money on the Stoc& E7chan'eH in the sense of preservin' their savin's. 6he ris& of losin' money is quite hi'h for a less competent individual. Insurance policies are not very popular in RomaniaH pro%a%ly due to the poor &no>led'e of this type of product %y the population. 6he evolution of certain insurance companies has also discoura'ed this type of savin'. Enit trustsH >hich are a po>erful savin's instrument in developed countriesH have lost the faith of potential customersH mainly due to the National Investment @und scandal. ButH neverthelessH the unit trusts set up %y the Romanian (ommercial Ban&H BRD and ING Ban& are >orthy of trust and are also
,)
Institut National de Developpement Economique a relia%le savin's instrument. Je may estimate that in the futureH %an&s >ill still %e the main savin's instrument for the population and even for corporate customers. Ne> %an&s 6he norms issued %y the National Ban& ma&e very difficult the settin' up of ne> %an&s. 3n the other handH economic development and the concentration of money >ill pro%a%ly lead to the mer'ers and acquisition. @or e7ampleH the mer'er >ith Banca 6iriacH PBB can %e re'arded as the fourth top %an&. 6he State 6he state has si'nificant influence upon the %an&in' activity throu'h the la>s it passes and throu'h the norms and the control of the NBR. 6a&in' into account the rather %lurred economic and le'al environment in RomaniaH the policy applied %y the NBR is ;ustified. 6he State 6reasure 6he 8inistry of @inance 2the state4 throu'h the state 6reasury has issued 6reasury %ills for the populationH so it %orro>ed from the population. 6he interest rate offered %y the state for the 6reasury %ills issued >as in most cases hi'her than the interest rate offered %y %an&s in the last years. Besides the fact that the interest rate >as )."F to *F hi'herH it >as also fi7ed for the entire maturity of the 6reasury %illH >hich made them a more attractive savin's instrument for the population than %an& deposits. (ustomers 2depositors and loan %eneficiaries4 Jithin the previous para'raphs >e have e7plained >hy depositors do not have a >ide array of choices >hen it comes to the possi%ility of savin'. Ender these conditionsH their ne'otiatin' po>er is very much diminishedH their only choice %ein' that of depositin' their money >ith a %an&. 3n the other handH it is also true that in an economy >hich sho>s slo> pace of developmentH such as RomaniaH most part of the population is poorH >hich ma&es savin's quite insi'nificant in many cases. @rom the point of vie> of %an&sH the deposits of the population ma&e up money resourcesH >hich %an&s need in order to function appropriately. 6hat is >hy %an& competition for this mar&et share 2the population4 and for this type of product 2deposits4 is still tou'h. A second cate'ory of customersH much more importantH is that of enterprises. 6he Qpro%lem is that in RomaniaH enterprises are also undercapitalised and short of money. Raisin' their money is an activity >here %an&in' competition is nevertheless very much present. StillH this does not ma&e enterprise more po>erful in the ne'otiation process. As re'ards loan %eneficiariesH individuals or companiesH their pro%lems are manyH startin' >ith the conditions required in order to %e 'ranted a loan and endin' >ith the cost of the loan. 6he applicantsH %e they individuals or le'al entitiesH cannot ne'otiate loans accordin' to their o>n termsH also ta&in'
,1
Institut National de Developpement Economique into account the fact that they can hardly find any other sources of finance %esides %an&s. 3)3) Con%lusions 6he analysis of the competitive environment leads to the follo>in' conclusions< In Romania %an&s are not a perfect resource. Ender these conditionsH the up.'oin' trend evolution of a %an&H >hatever its si9eH is very much dependent on its %ehaviourH its internal or'anisationH its or'anisational culture and on its ima'e. 6o the e7tent the internal or'anisation of a %an& is %etterH the %an& is %etterG the %an& shall %e more efficient >ithin its competitive environment. In a competitive environment characteri9ed %y an a''ressive mar&et share orientationH BRD aims at a dura%le developmentH %ased on a medium and lon'.term strate'y. 6he o%;ective is to moderni9e the Ban& so as it can achieve the standards of a Jest European %an&H a%le to face the challen'es of RomaniaIs inte'ration in the European Enion. 6his approach is achieva%le on the lon' term. As the mar&et share e7pandsH the commercial approach >ill put for>ard more diversified and innovativeH adapted products. 6he commercial approach >ill also pursue attractin' the youn' and the privile'ed customers 6he strate'y of moderni9ation and development places t.e cu*to+er in t.e centre o/ 4an3;* preoccupation*. 6he staffs play an important part in this process. Beside the trainin' pro'rams that are constantly improvin'H BRD is tryin' to mo%ili9e them around the &ey values of Socit Gnrale< professionalismH innovationH team spiritH >hich materiali9es in the commitment to>ards the customers and shareholders. In this stron' competin' environmentH the %an&s have to search and maintain the competitive advanta'e thus permanently monitorin' the other %an&s. EsuallyH this is done %y specialised offices for mar&et and concurrence analysisH usin' not only classic studies over the competin' offers %ut also modern researches such as =%enchmar&in'?. 6his allo>s to %an&s to foresee the chan'es of the mar&et conditionsH to ad;ust the strate'iesH to choose the appropriate tar'et mar&et se'mentsH to position the offersH to %etter face the competition. T.e 0ro>in0 co+ple(it, o/ t.e *er)ice* re?ue*te: 4, t.e cu*to+er* 8ore and more customers are 'ettin' >ell.informed and therefore more demandin' for modern and comple7 %an&in' services. 8ore and more the customers are ready to chan'e the %an& that didn0t succeed to cover their needs. @or this reasonH the %an&s have to pay special attention to the quality of the services offered and also to assure customer fidelisation in a %an&in' environment that %ecomes more and more a''ressive.
,#
Institut National de Developpement Economique I . BRD MASTERCARD GOLD CREDIT CARD %ROGRAM
4)1) Ba%kground 6he offer of the BRD remained immo%ili9ed since several years. At presentH in contrast to the tendency of the mar&etH the %an& is not present on the se'ment more profita%le< the one of the top clients. NeverthelessH this clientele is the o%;ect of the %an& attention since the launch of the action planH %e'innin' #))$. At lastH the chan'e of the consumer ha%its as >ell as the acceptance more and more spread card inH so than avera'e payment current 21$./)) esta%lishments commercial throu'h the Romania and an announced o%;ective of 11 ))) at the end of #))$4 are in a position to ;ustify the proposed step. Cre:it an: :e4it co+pare: 6here are four main types of payment card products< direct de%it cardsH deferred de%it cardsH char'e cards and credit cards. A direct de#it card is lin&ed to the cardholder0s %an& account and the cost of each purchase is deducted immediately. 6he cardholder spends his or her o>n money orH in some casesH uses an overdraft facility. A deferred de#it card is very similar to a direct de%it cardH the only difference %ein' that the cardholder is de%ited for purchases at a later date it could %e t>o days or one month. Deferred de%it cards are lin&ed to %an& accounts. *har+e cards >or& in the same >ay as deferred de%it cards %ut there is normally no direct lin& to the %an& account. 6hese are usually stand.alone accounts >ith no interest char'ed. 6he amount due must %e paid in full on a certain date. Ender Bisa classificationsH char'e cards are de%it cards. A credit card is an unsecured consumer loan. It is a stand.alone account and there is no need to have a %an& account >ith the issuer to 'et a credit card. +ayments do not have to %e made in full and %alances can %e carried over from month to monthH or revolve. A cardholder can pay anythin' from the minimum payment to the full amount.
,*
@., Ma*terCar:A 6he choice of 8aster(ard as a partner for the launch of the card Gold it had the precedin' fructuous colla%oration >ith this or'ani9ation. Je remind the participation of 8aster(ard to the countries aimin' the stimulation of the usa'e of cards to the +3S. 6he contri%ution >ill continue in #))$ and >ill %e the purpose of the usa'e volumes of the 8aster(ard cards. An important participation >ill %e e7pected in case of issuin' of the Gold card under the %rand 8aster(ard. At presentH #D* cards issued %y the BRD are 8aster(ard< the card more popular and the most used ones is the card 8aestroH support of the conventions of more than $)) )))) salaries.
4)2) Co,eren%e of t,e pro<e%t -it, t,e strategi% orientations of t,e B"# 6he top clients are in line >ith the development strate'y and the se'mentation initiated %y the BRD in #))$. 8ore than thatH the strate'y allo>s se'mentin' the variety of cards and to follo> %y manner more differentiated the consumer ha%its of its cardholders more and more important. By his differentiation levelH this card allo>s 'eneratin' income levels hi'h so %y the issuin' commission and administration ta7esH that %y the usa'e volumes and the commissions that a%out it result. At lastH the BRD is one of the alone important %an&s of the net>or& Soci t G n rale do not have access to top clients >hile the potential customer for this card type is >ell present in Romania. 4)3) 3a%tors triggers ,.*.1. E7ternal factors R 6he necessity to recover the commercial offer of the Romanian %an&sG R6he offer of the mar&et< o @inans%an&H 6ransilvania Ban&H Rome7tera Ban&H Italo.Romena Ban& 2Bisa G3:D4 o B(I6 2American E7presses G3:D4G o B(RH Raiffeisen Ban&H EnicreditH Romanian International Ban& 28aster(ard Gold4. R 6he consumer %ehaviour of this clientele se'ment is more and more oriented to>ards to the usa'e of electronic paymentsH so in Romania and a%road. 6he annual avera'e of usa'e %y card Gold is a%out ,.")) S D card ,source: -aster*ard .nternational/
,,
Institut National de Developpement Economique ,.*.#. Internal factors R 6he need to differentiate in a tan'i%le >ay offers dedicated to the top clientsH especially in the conte7t of the 'enerali9ation of the action plan on this mar&et throu'h the >hole net>or& of a'encies of the BRD. R 6he possi%ility to increase the income of the commissionsH ta&in' into consideration that it is a matter of a product >ith stron' valueH sales to a hi'h price. 6PE 3BKE(6 3@ 6PE +R3KE(6 is to present the interest of the sales of top clientsH to recall the different steps for the development of this serviceH as >ell as to define the o%;ectives follo> in the frame>or& of the envisa'ed pro;ect. 6.6. =.<e%tives follo- in t,e frame-ork of t,e program %rincipal o45ecti)e* 0(0(1 "#1ectives for customer . . +ersonali9ation of the offer intend for the privile'ed customers 6he offer of a product >ith stron' added value 2assurancesH medical and le'al assistanceH 'uarantee4 0(0($( "#1ectives for the #an 6he e7pansion of the variety of cards to>ards a se'ment more lucrative and the position of the BRD in this domain >ill allo> 'eneratin' an immediate profita%ility pulled of this product. 6he ma;or sources of revenue to >ait from this product are< Annual fee 6he fee cardholders pay to use credit cards. Income from interest 6his is 'enerally a credit card issuer0s main source of income. Interest is usually calculated daily on outstandin' %alances. Interest rates for cash advances are normally sli'htly hi'her than for purchases. Interchan'e 6he fee paid %y the acquirin' %an& to the issuin' %an& for each purchase made >ith a payment card. Domestic rates are set %y the local %an&s %y a'reement. 8aster(ard sets international rates. @orei'n e7chan'e 6his is the administration fee char'ed to cardholders for convertin' currency >hen they use their cards a%road. It is usually a percenta'e of the transaction. 3ther fees and income 6hese include char'es for late payment and e7ceedin' limitsH lost card protection and travel insurance.
,"
0(0(3( 2e3 components of credit card profita#ilit3
3n the other handH the costs involved are< (ost of funds 6his is the cost of the loan that the %an& ma&e to a customer until payment is collected. Direct costs All the costs associated >ith openin' and servicin' credit card accountsH includin'< R 8ar&etin' and advertisin' R +rocessin' applications R (ard issuance R 6ransaction processin' 2authori9in' purchasesH processin' paymentsH statement %illin'4 R (ustomer services R 6ransaction e7ceptions 2copy requests and char'e%ac&sO4 4char+e#ac 5 a transaction an .ssuer returns to an Acquirer R Account e7ceptions 2collections and fraud4 (redit losses (osts associated >ith %ad de%ts. &raud losses (osts associated >ith criminal %ehaviourH such as merchant fraud or counterfeitin'.$ 6o attract ne> customersH the %an& need to invest in mar&etin'H posta'eH administrationH credit %ureau reportin'H letters and telephone calls. If the applicant is declinedH this money has %een >asted. 6urnin' too many customers do>n also has a si'nificant impact on customer services. Jith careful tar'etin' and credit scorin'H the %an&s should %e a%le to achieve a decline rate of less than ,) per cent.
,$
Institut National de Developpement Economique It is also important to 'et the ri'ht %alance %et>een cardholders >ho %uild up outstandin' %alances and pay interest each month revolvers and those >ho ma&e purchases and pay the %alance off %efore any interest is char'ed transactors. 6oo many revolvers means an increased ris& of %ad de%tH >hile a lar'e num%er of transactors mean lo>er income. 6.6.6. Supple+entar, o45ecti)e* "#1ectives customer 6he increase of the variety of products and the response to a request of the net>or&. . 6he o%li'ation for the BRD to 'uarantee a quality service to its customers more profita%le "#1ectives #an . . 6he line up to the offers of the competitionH indeed passin' 6he position of the BRD on the se'ment of top clients.
4)5) "eminder of t,e %onte0t 6.-.2 . . . . E(ternal Ele+ent* physical persons that reali9e often important operations and that request a special treatment in a'reement >ith their social statute hi'h income customers private customers that travel frequently a%road sensitive to the assistance services and of assurance clients BI+ that >ould need a social distinction
6ar'et cardholders<
6.-.#. Internal Ele+ent* 6he standard credit line 'ranted for this card type 28aster(ard Gold4 is ".))) SH %ut ta&in' into consideration the conditions of the Romanian mar&et >e can o%tain a dispensation until *.))) S. 6he issuin' of a credit line supposes the placement on some places of a system of scorin' 2to see eventually adaptation of the scorin' e7istin'4. 6he administration of the credits 'ranted also must %e the o%;ect of a speciali9ed supervisionH in order to reduce to the ma7imum the ris& 'enerated. 8ore than thatH a collateral deposit >ill %e possi%le.
,/
Institut National de Developpement Economique 4)>) (%onomi%al and finan%ial issues Short analysis of the competition< Issuer Issuin' fee Raiffeisen Ban& 8aster(ard ) Gold 2R3N4 B(R 8aster(ard 2EER4 Enicredit Gold ) Annual fee 1)) EER #" EER ,# ESD Deposits collateral NDA (redit :imit T value of deposit collateral NDA
8aster(ard Gold " ESD Gold ") ESD principal #" supplementary
2R3NC EER4 RIB 8aster(ard 2R3NCESD4

Source : '''(no)cash(ro
1F of credit NDA limitH R3N min "
(onsiderin' the additional servicesH the ta7es of the proposed card are the follo>in' one< o Superior position< issuin' fee< $" EERG annual fee EER $". o Similar position< issuin' fee< #) EERG annual fee EER $) 6he avera'e interchan'e received for every +3S transaction carried out %y the cardholder of Gold is 1F. A mar'in on the rate of chan'es can %e applied for the operations in other currency. 6his one %ein' a%le to 'o to #."F. At lastH 8aster(ard 'ave us an a'reement in principle of a financial participation in case of issuin' of a card under their %rand. I remind that the acceptance of Bisa and 8aster(ard is the same over the >orldH appro7imately *1 millions points of sales. 6.B.2. Current po*ition C%ro4le+aticD As >e remind it previouslyH the Gold card ta&es his real value >ith the assurancesH services and 'uarantees that are associated for it. (ontacts in this direction have to %e esta%lished >ith Gras SavoyeH International S3S 2throu'h BP@84 and AIG 2throu'h 8aster(ard4. 6he %an& cost estimated service pac&a'e could 'o until #< E for a complete coverH the (omfort insurance service %ein' included. 3ther aspects to ta&e in consideration< . . . 6echnical aspects< implementation of the facility U overdraft V 2credit line4 Administration of the collateral deposit of 'uaranteeH interest and capture capacity eventuallyG Ris& 'enerated %y the offer of a credit line 8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product? ,1
Institut National de Developpement Economique . customers assistance alsoH from the point of vie> of responsi%ilities of the employees of the net>or& as for the placement some places of a privile'ed relation >ith the tar'eted se'ment of the mar&etH as from the point of vie> of assistance offered %y the intermediary one (all(enter. 6.B.#. A:)anta0e* o/ t.e *olution propo*e Representative indicators< E7istin' indicators . 6he a%andon of the card Bisa (lassic International 2B(I4. 6he card B(IH sales to $.5)) customers has a difficult position on the mar&et and do not offer additional service to the cardholders. Je consider that this card has not anymore reason to e7ist and recommend a%andonin' it to the profit of the Gold card. 6he client0s %asis concernedH ma;ority top clientsH >ould %e only favoured %y the additional services of a card Gold. 6his action >ould allo> us to release a BIN for other pro;ects. . 6he client0s distri%ution %y the top of the pyramid currently in course throu'h the net>or& allo>s us to determine quic&ly the tar'et of this product. Indicators to create . . . 6he severe administration of the credit lines 'rantedH considerin' the hi'h amountsH as >ell as requirements of the tar'eted customers 6he net>or& must %e in a position to esta%lish and maintain a privile'ed relation >ith the clients of the card Gold @ollo>.up on the deposits collaterals
(.+. ,e) benefits of the program: R Pi'h income customers spend more and use their cards more often than 8astercard Standard cardholders R As a premium cardH 8aster(ard Gold can 'enerate at least t>ice as much profit as a standard card R Borro>in' on 8aster(ard Gold cards is often hi'her than on standard cardsH 'eneratin' hi'her income from interest R (ardholders are normally >illin' to pay hi'her fees R A comprehensive 8aster(ard support pac&a'e includes profita%ility modelin'H case studiesH mar&etin' and ris& mana'ement consultancy and trainin' R Balue.added services such as travel insurance at competitive prices R @le7i%le card desi'ns usin' a ran'e of 'old shades
,5
Institut National de Developpement Economique R Good product for premium co.%randin' pro'rams 4)8) Cost and revenue estimation 4.8.1. Investment costs 6he cost of 8aster(ard for BIN< #") S Security (haracter< #") S (ost of the implementation pro;ect< 1.")) S 3ther various costs< 1).))) S 636A:< 1#.))) S 4.8.2. Implementation cost 6he implementation costs are still that those of (ards Department currently. Add the e7penses of mar&etin' mi7 product that are estimated to a%out #) S %y card. 6hese costs are inte'rated in the pictures of estimative costs.
Ite+ Acquisition of ".))) cards InsuranceH services (onfort 2Insurance4 (ommunication
%F 1."S 1# S "." S
Total /.")) S $).))) S #,.")) S #).))) S
")
Institut National de Developpement Economique 6.=.&. E*ti+ation o/ re)enue* I estimate that the %an& >ill issue %et>een *))) and ".))) cards for the first year. I ta&e into consideration t>o possi%ilities of ta7es.
1. Standard price< issuin' fee< $" SG annual fee< $" S. 6he first one positions our card at the hi'hest level of the mar&et 2superior price to the tar'eted %an&s on the top clients such RaiffeisenH B(R4 Scenario --(osts (lient Issuin' $" S ") S #) S Etili9ation $" S ") S #) S (osts Ban& Services #) S #) S #) S Net D (ard 1#) S 1) S #) S 636A: 11/.))) S *#.))) S 11.))) S #&1.<<< E
cards 1./)) cards sold ,)) additional cards 5)) cards staff and BI+ $.$A/ .--- cards
Scenario cards
%---
(osts (lient Issuin' $" S ") S #) S Etili9ation $" S ") S #) S
(ost Ban& Services #) S #) S #) S
Net D (ard 11) S 1) S #) S
636A:
#.")) cards sold ")) additional cards #.))) cards staff and BI+ $.$A/%.--- cards
#/".))) S ,).))) S ,).))) S &--.<<< E
#. Standard price< issuin' fee< #) SG annual fee< $) S. 6he secondH even that it %rin's smallest amount incomeG it offers us a %etter position >ith respect to the conditions of the mar&et.
"1
Scenario
%---
(osts (lient Issuin' #) S #) S #) S Etili9ation $) S ") S #) S
Net D (ard $) S ") S #) S
636A: 1").))) S #".))) S ,).))) S #2-.<<< E
cards #.")) cards sold ")) additional cards #.))) cards staff and BI+ $.$A/ cards %.---
Scenario --- cards 1./)) cards sold ,)) additional cards 5)) cards staff et BI+ $.$A/ .--- cards
(osts (lient Issuin' #) S #) S #) S Etili9ation $) S ,) S #) S
Net D (ard $) S ,) S #) S
636A: 1)#.))) S 1$.))) S 11.))) S 2&B.<<< E
. Esa'e< avera'e annual estimated< ,.))) S %y cardH **) S D months 2estimation to 1)F of active cards4G interchan'e received< 1F ".))) cards 7 1)F active cards 7 ,.))) S D card 7 1F G *.))) cards 7 1)F active cards 7 ,.))) S D card 7 1F G 2B<.<<< E $B.<<< E
. Return over rates of e7chan'es< estimation W reali9ed activity a%roadG commission of 1."F on the e7chan'es carried out ".))) cards 7 1)F active cards 7 W 7 ,.))) S D card 7 1."F T *.))) cards 7 1)F active cards 7 W 7 ,.))) S D card 7 1."F T B<.<<< E &B.<<< E
. Returned supposed on the usa'e of the credit linesG " mar'in points ".))) cards 7 1)F active cards 7 "F 7 1.))) S D card T *.))) cards 7 1)F active cards 7 "F 7 1.))) S D card T #<<.<<< E 2#<.<<< E
"#
Total u*a0eH
-.<<< car:* &.<<< car:* 6#<.<<< E #-#.<<< E
636A: +R3@I6 ES6I8A6ES 2considerin' the alternative adopted ta7es $" SD$" S or #) SD$"S4< Scenario -.<<< cards 1--.<<< EI,ear Scenario &.<<< cards 6=$.<<< EI,ear Are e6cluded from the calculation: . Eventual contri%ution of 8aster(ard . Returned and costs on the collaterals deposits or or B&-.<<< EI,ear &==.<<< EI,ear
. %RO'ECT DESCRI%TION
A. EJECFTI E SFMMARK 1. +R3DE(6 #. 6ARGE6 (ES638ERS *. -EX (ES638ER BA:EE
"*

,. :3AN :3SSES ". (REDI6 :I8I6 $. (ERREN(X R3N /. IN6ERES6 RA6E 1. ANNEA: @EE 5. (3S6S 3@ @ENDS 1). S+READ 11. (ARD DERA6I3N 2BA:IDI6X4 1#. RE+AX8EN6 1*. (3::A6ERA: 1,. (REDI6 (RI6ERIA 1". SXS6E8 REYEIRE8EN6 B. CHARACTERISTICS OF THE %ROGRAM 1. +R3DE(6 (PARA(6ERIS6I(S #. @EES C (388ISSI3NS *. +A(-AGE 3@ SERBI(ES A66A(PED 63 6PE (ARD ,. 8AR-E6ING 3BKE(6IBES D +3SI6I3NING
,.1. 6he card mar&et ,.#. (ard competition analysis ,.*. Enique sellin' points ,.,. (ampai'n information ,.". Distri%ution channels
". (REDI6 (ARD A++:I(A6I3N +R3(ESS AND +R3(EDERE S6E+S $. :3AN :3SS +R3BISI3N /. :EBE:S 3@ DE:INGEEN(X 1. I8+:E8EN6A6I3N +:AN C. FINANCIAL ASSFMTIONS D. RIS!S E. DE%ARTMENTS CONCERNING BK THE %RO'ECT
A. EJECFTI E SFMMARK
1. 0roduct 6his pro'ram offers 8aster(ard Gold to e7itin' or ne> clientele. @or this purpose a ne> BINO >ill %e requested from 8aster(ard and separate plastic card desi'ned >ill %e developed. 6he +roduct is desi'ned as a real revolvin' credit card product.
",
Institut National de Developpement Economique 8aster(ard Gold is a premium product aimed at affluent customers. It can %e used in the lar'est and most >idely.reco'ni9ed merchant and A68 net>or& in the >orld. 6he product >ill %e offered to all customers >ho are Romanian citi9ens 2residents4 and are eli'i%le to meet the criteria. %ro:uct 4ene/it* /or 4an3.
Gold 8aster(ard cards offer the opportunity to tar'et ne> customer as >ell as re>ard e7istin' standard cardholders >ith a premium product that reflects hi'her levels of reco'nitionH superior %enefitsH and unsurpassed international acceptance. Pi'her loyalty from our %est customersH increased cardholder reco'nitionH and superior portfolio profita%ilityG
%ro:uct 4ene/it* /or cu*to+er*H
6he main %enefits of a Gold (ard are< hi'h spendin' po>erH reco'nition and added protection. 6o %e'in >ithH all Gold 8aster(ard (ard cardholders have a minimum.spendin' limit of *))) EERH so that they can use the card as much as they need toH >ithout any >orries. (arryin' a Gold card also means receivin' superior treatment and en;oyin' the reco'nition of %elon'in' to a select 'roup. And most importantlyH a Gold 8aster(ard cardholder is protected %y added insurance and assistance services >hich provide emer'ency cash advancesH emer'ency card reportin' and replacementH #,.hours a dayH /.days a >ee&. A smarter &ind of card that 'ives financial achievers the spendin' po>er they deserve and a selected ran'e of services and re>ards to suit their lifestyle International acceptance and cash access that our %est customer needs.
B.N4 5 Ban .dentification Num#er assi+ned #3 -aster*ard 2. $arget Customers Important clientele of BRD 2in a first sta'e4 >ith hi'h declared income 2over #)), EuroDmonth4 +otential customers attracted %y the personal account mana'ers for BI+ >ith the approval of the %ranch0s 8ana'erG
""
Institut National de Developpement Economique 8ore affluent customers >ho are accustomed to usin' credit for everythin' from 'as to hi'h. tic&et travel and retail purchasesG +rivate customer that travel frequently a%road sensitive to the assistance services and of assuranceG (ustomers >ho feel the need to %e treated specially in all respects. . ,e) Customer 1alue: @le7i%ility to use the card locally and internationallyG Assi'nin' hi'her social status to a cardholder havin' a credit cardG +rompt and facilitated procedure of applyin'H processin'H approvin' and deliverin' the credit cardH (lient oriented approachG A comple7 pac&a'e of assistance services 2voya'e assistance servicesH medical assistance servicesH le'al assistance servicesH personal assistance services4 A vide ran'e of insurances 2insurance in case of lossDdelay of re'istered lu''a'e or of the air fli'htH insurance in case of travel annulmentH insurance in case of accident occurred durin' travels a%roadH civil lia%ility insurance4 Emer'ency services a%roadH %y a simple phone callH 8aster(ard Gold 'rants you access a%road to a series of free emer'ency servicesH such as< phone assistance on card utili9ationH replacement >ithin ,1 hours of the lost or stolen card or 'rantin' an emer'ency cash advance. (. /oan /osses Gross Jrite 3ff< Recoveries< Net Jrite 3ff<
* F of outstandin' %alances ")F 1." F
%. Credit /imit (redit :imit of 8aster(ard Gold shall %e approved >ithin minimum *))) EER . ma7imum 1) ))) EERH dependin' of the client0s income or the collateral deposit 'uarantee 2. Currenc) R3N
"$
Institut National de Developpement Economique 6he (redit :imit of 8aster(ard (redit (ard shall %e approved as a R3N lendin' facility to customer0s account. (urrency e7chan'e for international transaction automatically performed %y the %an&. +. #nterest Rate #$F per annum *. Annual Fees: 2- 3 4. Cost of Funds 1." F 1-. Spread 1$.# F for X#))5 11. Card 5uration 61alidit)7 +roduct validity< # years. 6he card >ill %e automatically rene>ed if the client %ehaviour durin' card validity period >as >ithin the accepta%le standards 12. Repa)ment 8onthly repayment should %e at least interest and commissions of the amount of transactions made >ithin one %illin' cycle. 1 . Collateral . (ollateral deposit represented the 'uarantee of the facility of credit line. 6he deposit should cover 11)F from the credit line. . (lients >ith declared net monthly income over #)), Euro can o%tain a credit line in amount of *))) Euro 2R3N equivalent4 ;ust >ith %an&0s analy9e. 1(. Credit Criteria 8inimum a'e< #) 8inimum monthly net income< over #)), EER 2R3: equivalent4 Romanian residency
+re.screenin' criteria
(redit criteria
"/
Institut National de Developpement Economique Applicant should not %e listed >ith overdue amount in (RB 2Ban&in' Ris& Data%ase4 or in the %lac& list provided %y the insurance company nor had declared it in card application formG shall e7ceptions from this rule occurH they >ill %e evaluated separately. In the moment that >ill %e availa%leH the customer >ill %e also verified in the (redit Bureau0s %lac& list. (redit scorin' application >ill %e used >ith statistical data analysis. Applicant should %e a%ove cut off score . as esta%lished %y the %an& . in order to %e a%le to o%tain a credit cardG 6he level of approved (redit limit is esta%lished %y the scorin' application %et>een *))) and 1) ))) EER. (redit (ontrols ID and documentation chec& Application (redit Scorin' De%t.to.income analysis Ban&in' Ris& Data%ase cross.chec& (redit history and e7posure >ith BRD 2e7istin' customers4 8inimum # (redit 3fficers revie>
1%. S)stem re8uirement All internal applications used for all other cardsH >ere modified to >or& >ith 8aster(ard files too. Application %roce**in0 S,*te+ in house systemG there are different applications for credit scorin' and data input. (redit scorin' is performed %y a stand.alone application and all data are captured and recordedH for %oth approved and re;ected applications. (ard personali9ation is made at (ards Department. Collection* S,*te+* 6he Ban& >ill supervise the collection process centrally 2%y the Retail Ban&in' at a Pead 3ffice level4.
B. CHARACTERISTICS OF THE %ROGRAM 8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product? "1
1. 0roduct Characteristics +roduct 6ype +urpose (urrency (redit :imit 8aster(ard Gold Revolvin' (redit (ard +urchases and cash >ithdra>als locally and a%road R3N 8inimum *))) EER approved %y the %an& 2clients >ith declared net monthly income over #)), Euro4 8a7imum 1) ))) EER 2>ith collateral deposit4 (ard Duration Interest Rate +enalty 8inimum +ayment (ost of funds 2in R3N counter value4 6>o years @loatin' #$F #$F M "F Dmonth 1))F interest M 1))F commissions @loatin' 6reasury Bill RateH appro7imately 5 Interest spread (redit criteria Spread >ill %e around 1/F .8inimum a'e< #) .Acceptance from scorin' system .In case the client has a current account >ith BRDH he >ill have the option to authori9e the Ban& %y standin' order to de%it his account for each monthly minimum payment for others credit in R3N at BRD.
Documents accompan3in+ application . . (opy of Identification cardH Re'ular employment certificateH
. Documents to attests the monthly income and e7penses 2. Fees 9 Commissions No. crt. 1 Ma*terCar: GOLD cu*to+er* free "5
Co++i**ion (ash deposit on card account
# * , " $ / 1 5 1) 11 1# 1* 1, 1" 1$ 1/
(ash >ithdra>al at o>n A68s (ash >ithdra>al at BRD0s +3S (ash >ithdra>al at other %an&0s A68s
)."F )."F 1F H min *." R3N
(ash >ithdra>al at other Romanian %an&s +3Ses 1F H min *." R3N (ash >ithdra>al a%road A68s (ash >ithdra>al from other a%road %an&s +3S Emer'ency cash +urchase in Romania +urchase a%road 3pen the card account Issuin' fee (ard rene>al Annual fee (ard replacement (har'e%ac& not ;ustified Statement 1F M * EER 1F M * EER 1FM" R3N free free free #) EER free $) EER free "." R3N free free free )." R3N free free free NDA free
11 Statement at other address than BRD %ranches 15 Statement at BRD #) #1 ## #* #, #" Balance inquiry 2A68 D Boice4 Statement %y request +ayment for (onne7H 3ran'e 2mo%ile invoice4 Direct De%it +IN chan'e (redit :imit actuali9ed
. 0ackage of ser"ices attached to the card A comple7 pac&a'e of assistance services<
$)
Institut National de Developpement Economique Boya'e assistance services< 'ettin' useful information on the travel the (ardholder have to ma&eH recovery and transmission of lu''a'e that reached the >ron' destinationH funds advancesG 8edical assistance services< advances for medical char'esH accommodation 'ranted durin' convalescenceH etc. :e'al assistance services< 'rantin' le'al representationH underta&in' le'al e7pensesG +ersonal assistance services< %oo&in' tic&ets to various sho>sH etc. A >ide ran'e of insurances< Insurance in case of lossDdelay of re'istered lu''a'e of the air fli'ht. If a cardholder0s lu''a'e is at least four hours lateH an indemnity of up to ,") EER >ill %e paid to cover the cost of emer'ency purchases. Insurance in case of travel annulment. If a fli'ht is delayed %y four hours or moreH cardholders are covered up to 1#" EERH for essential purchase such as meals and refreshments 2total annulment< $))) EER4 Enderta&in' of medical and hospitali9ation char'es. 6he cardholder is covered in case of hospitali9ation due to an accident or illness durin' a trip a%road for ma7imum $) days 2") EERDday4 Insurance in case of accident occurred durin' travels a%road 2#") ))) EER4 (ivil lia%ility insurance 21)) ))) EER4. I8+3R6AN6Z Access to these services is possi#le #3 the mere utili7ation of the card to pa3 for the travel e6penses( 8he *ardholders have access to these services $0 hours a da3, #3 callin+ the phone num#er specified on the insurance voucher received 'ith the card( 8he voucher certifies that the card o'ner holds the concerned insurances( Emer'ency services a%road< By a simple phone callH 8aster(ard 'rants access a%road to a series of free emer'ency servicesH such as< phone assistance on card utili9ationH replacement >ithin ,1 hours of the lost or stolen card or 'rantin' an emer'ency cash advance. Discount for the reservation in 'reat hotel chains a%road 2".1)F discountin the hotel net>or& :e 8eridien 1") hotels in "" countriesH and Star>ood @our +ointsH SheratonH Jestin Potels C resortsH :u7ury (ollection4
$1
Institut National de Developpement Economique (. Marketing .b:ecti"es ; 0ositioning BRD aims to esta%lish itself as a leadin' %an& in the retail %an&in' services and to enhance the ran'e of %an&in' products and services offered to citi9ens %y offerin' a >ide ran'e of innovative products addressed to medium and upper hi'h income individuals. 6herefore %y launchin' a real credit card product BRD >ill offer credit facility to its cardholders at the same time %uildin' and stren'thenin' the relationship >ith them as >ell as recruitin' ne> customers. Ender>ritin' credit criteria >ill differentiate the tar'eted se'ment of customers le'i%le for the credit card productH assi'nin' appropriate credit limit. Specific o%;ectives are< . . . :aunch of a ne> credit card productG Buildin' a>areness for the productG 8ar&et penetration.
6.2. T.e Car: Mar3et BRD is one of the leadin' %an&s in the card %usiness in the country in terms of the num%er of issued cardsH installed +3S terminals 2*#))4 and A68s 2"/)4. +osses a portfolio of 2 2&2 2-< car:*< BISA Electron BISA (lassic Domestic Bisa (lassic International BISA Business Domestic BISA Business International 8AES6R3 8aster(ard Standard Euro 8aster(ard Business Euro (irrus 1*) 1," 15$ "$* $5)) 1))#" 1"*$ /$1 *,) 1" ,1* 1,*# 5$
Car: 4u*ine** in BRD has increased %y ##F in terms of the num%er of issued cards in #))5 compared to the same period in #))1. NeverthelessH an increased issued card does not mean increased income under the same dynamics %ecause the level of income su%stantially depends on the performed transactions >ith forei'n and domestic cards as >ell as on the num%er of merchants and sellin' points >here transactions could %e performed.
$#
Institut National de Developpement Economique By launchin' a real revolvin' credit card product >hich >as missin' from our offerH BRD >ill %e one the fe> %an&s on local mar&et offerin' credit facility to its cardholders at the same time %uildin' and stren'thenin' the relationship >ith them as >ell as recruitin' ne> customers. (redit card mar&et 2Dec. #))14<
Acceptin' infrastructure estimations for Dec. #))1< A68 *.*1* +3S 1$./)) Imprinter 1."))
At the end of #))1 the total num%er of active cards issued on Romanian mar&et >as ".1)1.")) accordin' to NBR statistics.
(.2. CAR5 C.M0&$#$#.< A<A/=S#S

8he Ban# ,ard
B"#
$(S8/R,(RD G5'D
BC"
/;R5,(RD< $(S8/R,(RD
"2I33(I$(N
$(S8/R,(RD G5'D
"IB
$(S8/R,(RD G5'D $(S8/R,(RD ,'(S.,
?niCredit
$(S8/R,(RD G5'D
$*

;tili&ation area ,urrency .ntere t rate $a>. value o2 the credit .nternal and international R54 2"* 1) ))) /;R ?R54 e@uivalentA .nternal and international /;R 1)* e@ual Bith collateral depo it international R54 2+* "))) /;R .nternal and international R54 and ;SD 2%* and 12* 1!-))) Cmin. !-))) C .nternal and international R54 and ;SD 2%* and 12* ! .nternal and international R54 and /;R 1)* /ur= 01 * R54 ,ollateral depo it mu t cover 12)* o2 credit limit 2))4 R54<day
5ut o2 Bhich alloBed ca h BithdraBal $inimum amount to 7e monthly reim7. 8he applicantE income accepted ,ard i ue 2ee (nnual 2ee
1))*
!)) /;R<day
4)*
!))) R54
1))*
at lea t intere t and commi ion 4et alarydividend rental 2) /;R ")
1!*D intere t D commi ion 4et alary- other ta7le income 2or more than 2 yr ) 2!
1)*
1)*
1)*
2)*
4et alary
Family net alary- other ta7le income proved 7y document concluded 2or more than 2 year !) R54 1*2rom cr. 'imit- min ! R54 )<) ).!* min. 1 R54 1* D 2-! R54 < !*min 0 ;SD 14G21 2!) 1*
4et Salary
1)) /;R 0!)
F! F42
Fee <tran action intern<internation. ,a h BithdraBal at oBn (8$ < other 7an# (8$ < a7road (8$ 8ime 2or card delivery ?no o2 day A ,redit tenor 6enalty intere t
)< ) )-!)* 1*D0-! R54 1*D0 /;R 1)
) " /;R " /;R " /;R 14G21
)* < 1* 1* min 2 R54< 1* D 2-! R54 2* min 0 /;R 14 G21
)<) ).!*< 1* D 2!-))) < !* 14G21 1* < 1*D1 ;SD< 1*DF 0-! 4<(
2 year !* <month addition to the intere t rate in urance ervice included
2 year 4<(
Hhole li2e 4!*
Hhole li2e 02* and 10-!*
Hhole li2e 02* and 10-!*
2 year ")* R54< 2)*/;R ,ard reneBal F!
5ther detail
ReneBal card ?42-! /;RA. .n urance ervice included
Grace period 2or intere t I !) day in ca e o2 tran action Spou eE income i not con idered.
8he product i al o o22ered Bithin a pac#age o2 product J ervice .
4)3) ?ni@ue selling points By identifyin' its potential clientsH the product >ill position itself clearly as the unique and distin'uished credit card product on the mar&etG By reco'ni9in' the product they needH the clients >ill %e ready to pay its price.
$,
Institut National de Developpement Economique (.(. Campaign #nformation A4o)e t.e Line Mar3etin0 Ca+pai0n Advertisin' in the 8ass 8edia and the press +lacement of posters and %rochures in the %ranches. Belo> t.e Line Mar3etin0 Ca+pai0n Direct 8ar&etin'< 8ailin's to a selected tar'et of our clientele. 6he education and trainin' of the personnel at the %ranches is a &ey element for reali9in' successful communication >ith the clients as %ranch net>or& is perceived as an important sales and distri%ution channel. (.%. 5istribution Channels: Sales e7pectations accordin' to distri%ution channels are %ased on %ranch net>or&. %. Credit Card Application 0rocess and 0rocedure Steps 6he counsellor for top clients from every %ranch >ill contact the clients from BRD data%ase >ith lar'e deposits and >ill ma&e a proposal in order to o%tain a 8aster(ard Gold (redit card. 6he client receives Standard Application form as >ell as advertisin' DpromotionalD materials. In the %rochure heDshe >ill find a list of all required documentsH >hich heDshe has to present 2documents provin' his income etc.4.
Sale procedure
(redit (ard Application .6he customer su%mits the application form alon' >ith the contract and all required documents throu'h distri%ution %ranch net>or&. .In case the client fulfils the 'eneral criteria of the applicationH it is proceeded further in the central system. (redit Approval (redit Department from the %ranch >ill 'rant credit approval on the same day of the receipt of the application. 3nce the process is completedH the Ban& representative >ill process the Application in the system.
$"
Institut National de Developpement Economique (ard production As soon as the data are entered into the front.end application soft>are and credit scorin' is performed alon' >ith the financial analysisH appropriate decision is made. After>ards card plastic alon' >ith the +IN 8ailer is produced and customer account is opened in the system.
2.
/oan /oss 0ro"ision 6he classification of loans is made su%;ect to the follo>in' criteria< a4 the de%t serviceH reflected as the num%er of the days of delay in payments dueG %4 the financial performance as resultin' from the revie> of a set of credit criteriaG c4 if the %an& started or not the le'al procedures a'ainst the de%tors. 6he financial performance of the de%tor is esta%lished accordin' to BRD scorin' system %y includin' all the customers a%ove the product0s cut.off score in the @irst (lass. @or the loan classificationH the com%ined influence of the * factors detailed a%ove 2aH %H c4 is ta&en into consideration as follo>s< the loan >ill %e classified automatically as =loss? should the %an& started the foreclosure proceduresG should the %an& not started the foreclosure proceduresH the loan >ill %e classified as =standard?H =>atch?H =su%standard?H =dou%tful?H =loss? %ased on the de%t service and the financial performance.
6he classification is presented in the ta%le %elo>H ta&in' into account that all individuals are ran&ed as class A financial performance @or the calculation of the ris& provisionsH the follo>in' steps >ill %e ta&en< 1. the determination of the calculation %asisH as follo>s< a4 %y deductin' the value of collateral from the %an&0s e7posure on each de%torH in case no foreclosure procedure has %een initiated %y the %an& and the de%t service for payments under the respective loan is not more than 5) daysG %4 %y ta&in' into consideration the >hole e7posure of the %an& 2irrespective of collateral4 for< loans classified as =:oss?G loans for >hich the %an& has initiated the foreclosure proceduresG loans recordin' overdue payments for more than 5) days.
$$
Institut National de Developpement Economique AlsoH after 5) days of delayH the loan is >ritten off %alance.
#. 6he calculation of ris& provisions %y applyin' the provisionin' factor over the calculation %asisH accordin' to the levels esta%lished %y the National Ban& of RomaniaH as follo>s<
De4t *er)ice Loan cla**i/ication %ro)i*ionin0 /actor CLD
).1" days Standard )
1$.*) days Jatch "
*1.$) days Su%standard #)
$1.5) days Dou%tful ")
[ 5) days :oss 1))
6he Ban& calculates separately provisions per each loan account and monitors provisions per product cate'ory >ithin the Retail Ban&in' as follo>s< (onsumer :oans (redit (ards Pousin' :oans Auto :oans 3ther :oans
+.
/e"els of delin8uenc) 6he Ban& >ill assi'n the responsi%ility of (ollection of overdue loans to a (ollection 3fficer 2(34 >ithin the Retail Ban&in' at a Pead 3ffice level. Accordin' to the delinquency level appropriate card status >ill %e recorded in the system and response code 'enerated. Le)el o/ :elin?uenc, ta%le is presented %elo>< Action* to 4e ta3en
$/
Institut National de Developpement Economique Fp to &< :a,* &< up to B< :a,* B< up to $< :a,* $< :a,* M Le)el 6 Le)el # Le)el &

Le)el 2
A letter >ill %e issued for the clientH specifyin' the delay +enalty interest is applied (lient is contacted %y phone A >arnin' is inserted into the statement A letter >ill %e issued 2on client0s addressH >ith receivin' confirmation4G client is as&ed to pay all it0s due
and announcement a%out the card %loc&in' A letter is issued 2client0s address4H >ith contract cancellation announcementG the credit %ecome eli'i%le for le'al actionG
(ard status %ecame automatically =pic&.up? 2the %an& is tryin' to recover the card at first usa'e4G 6he credit is recorded off %alance 6he collection unit plus le'al dept. >ill start the enforcement procedure to recover the de%ts
/egal actions 6he credit account %ecomes eli'i%le for le'al action if it %ecomes 5) days past due or may %ecome at any other time provided that one of the follo>in' occurs< . . . (ustomer refuses to pay (ustomer is suspect for fraudulent action 6he %an& receives information from e7ternal sources that the customer is in serious financial difficulties
*. #mplementation 0lan ,9lease find attached the Implementation plan chart developed in -icrosoft 9ro1ect/
2. Ma*terCar: relate: /or+* an: :ocu+ent* recei)in0 ,specific forms and documents are to #e fulfilled for pro1ect openin+/. #. O4tainin0 t.e ne> BIN /ro+ Ma*terCar:. &. 6. . fillin' the forms and documents for the ne> BIN . sendin' the forms and receivin' the BIN from 8aster(ard 8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product? $1
Institut National de Developpement Economique -. Fillin0 %MN C%rincipal Me+4er Nue*tionnaire/: the document is containin+ all financial;non)financial information re+ardin+ the ne' product B. RAM% certi/ication CRi*3 A**e**+ent Me+4er %ro0ra+); the Ban is inspected #3 -aster*ard for compliance 'ith +eneral rules 1. %la*tic* =. $. 2<. 22. . esta%lish the company for plastic productionG . plastic desi'n 2creation and internal approval4 . sendin' the desi'n to 8aster(ardG . 8aster(ard preliminary approval
2#. Creatin0Ia+en:in0 internal proce:ure* /or proce**in0Ioperation* ne> pro:uct 2&. %la*tic pro:uction 26. 221. . production . final approval from 8aster(ard for plastics . >ritten request for approval 2to'ether >ith all necessary documents and samples4 flo': desi+nin+ internal documents;forms: definin+ informatic requests: up+radin+ informatic solution and applications/ 15. Ma*terCar: Certi/ication /or operational i**ue* ,connectivit3 tests #et'een .8 s3stems: clearin+ and settlement tests: cards functionalit3 tests/ #<. O4tainin0 t.e OLi)e7DateP /ro+ Ma*terCar:. #2. Mar3etin0 ca+pai0n /or t.e ne> pro:uct. ##. Goin0 LI E.
2B. NBR appro)alIaut.ori9ation /or :o+e*tic operation >it. t.e ne> pro:uct 2=. I+ple+entin0 t.e ne> pro:uct an: t.e proce**in0 *olution ,definin+;desi+nin+ information
C. F#<A<C#A/ ASS>M0$#.<S 2. Nu+4er o/ Cu*to+er* %er Loan Tier

#<<$ #<<B #<<1
Ne> (ustomers 6otal (ustomers

9er card ,in <ur/
#H))) #H)))
*H))) "H)))
"H))) 1)H)))
#. Cre:it Li+it* I A)0. Balance %er Car:

#<<$ #<<B #<<1
Avera'e credit limit Avera'e outstandin' amount &. A)era0e Loan Tenor
"))) #")
"))) 1111
"))) **1*
$5
Institut National de Developpement Economique Revolvin' credit facility 6. Intere*t Rate Nominal interest rate< #$F p.a. -. Co*t o/ Fun:*Q 1."F B. Sprea:* 1$.#F for X#))5 1. Intere*t Inco+e
In thousand EER3 Net Interest Income #<<,1 #<<B 15# #<<1 "*/
=. A:)erti*in0 Co*t* 6he cost for communication.mi7< advertisin'H pu%lic relationsH etc. >ill %e estimated appro7imately to<
In thousand EER3 Advertisin' C +romotion #<<#) #<<B #) #<<1 #)
$. Operatin0 Co*t* 6he other operatin' e7penses 233E4 durin' the years >ill %e<
In thousand EER3 3ther 3peratin' E7penses
#<<#<<B #<<1
#/
"*
2<. Loan Lo** %ro)i*ion Accordin' to the e7istin' Romanian le'islationH the loan loss provisions are e7plained in detail in (hapter BH section $. 22. @rite7O// 6he forecast for the ne7t years is as follo><
,in =000s <>R"/ Jrite off 2*F4 Recovery 2")F4 Net JD3ff 21."F4 #<<1" /." /." #<<B ,1 #1 #1 #<<1 1$ ,* ,*
/)

#<<A**u+p tion* No. of Ne> (a r d s 6ota l Num %er of (a r d s Aver a'e Num %er of (a rd s Activa tion Ra te F Active XD E (ustom er s Active Aver a'e (ustom er s Tran*action olu+e * Aver a'e 6r a nsa ction Am ount per Active ca rd 2a nnua l4 6ota l 6r a nsaction Bolum e 2in Euro I )))s4 F (a sh Jithd r a> a ls F +urchases (a sh Jithd ra > a ls 2in Eur o I)))s4 +ur cha ses 2in Eur o I)))s4 Li+it* R Balance * Av'H (red it :im it D (a rd 6ota l (r ed it :im its Appr oved 2in Euro I)))s4 F Etilisation Rate Out*tan:in0 Balance * Cin Euro 8<<<*D Aver a'e Bala nces 2in Eur o I)))s4 Roll Ra tes Av'. Balance D (a r d %ricin0 Issuin' @ee per ca r d 2in Euros4 Annua l fee per ca r d 2in Euros4 Annua l @ees Ja ivers F IR@ @ees 2Aver a 'e4 @ees for A68 > ithd r a > als Inter est r a te 2Nom ina l4 Inter est r a te 2Effective4 @und in' (ost Spr ea d Inco+e State+ent in 8<<<* Eur Net Inter est Incom e Annua l @ees 8 er chant @ees A68 Jithd ra > a l fees Ne t Financial Re)e nue CNFRD Op eratin0 E(pe n*e * Cin EFR 8<<<*D Sa lar ies C Benefits 2SCBs4 Ad ver tisin' C +r om otion 2AC+4 3ther 3per a tin' E7penses 233E4 Total Op e ratin0 E(p en*e* CTOED Inco+e Be / ore %ro)i*ion* R Ta( CIB%TD Jr ite .off , 3@/ Recovery , ?0@/ Net JD 3ff 21."F4 Inco+e Be / ore Ta( CIBTD 6a 7es ,A$?@/ Ne t Inco+e CNID #) #) 5 6$ ?@ 2#1" 1 1 22= #5 == *) #) #/ 11 ?@ 6-= ,1 #1 #1 6&1 1)5 &#= ") #) "* 2#& 0@ 2.22< 1$ ,* ,* 2.<B1 #$/ =<< #<<6 ,1 1#, , " 216 #<<15# #/) ,1 *1 -&6 #<<B "*/ "#) 111 "5 2.#&& #) $)H) *)F 1H)F )H"F #$H)F #,H/F 1H"F 1$H#F #) $)H) *)F 1H)F )H"F #$H)F #,H/F 1H"F 1$H#F #) $)H) *)F 1H)F )H"F #$H)F #,H/F 1H"F 1$H#F ".))) 1).))) "F -<< #") 5"F #") ".))) #".))) 1F 2.=11.111 5"F */" ".))) ").))) 1)F 6.1-< *.*1* 5"F ,/" ,.))) 1.,)) /)F *)F 51) ,#) ,.))) 1).*)) $)F ,)F $.11) ,.1#) ,.))) #*.")) ")F ")F 11./") 11./") #.))) #.))) ")) /)F 1.,)) *") *.))) ".))) *.")) /"F *./") #."/" ".))) 1).))) /.")) 1)F 1.))) ".1/" #<<B #<<1
!e , Ratio* (+A 1) 1, 1,
/1
5. R#S,S Ri*3 a**ociate: to t.e reali9ation o/ t.e pro5ect . 6he principal ris& consists in the quality of the service currently offer %y the BRD that is not at the standard ones of a top clients< o the format of the statement of the accountG o 6he correspondence I%an& D ( ,))G . . Approved of a credit line supposes an additional ris&H especially considerin' of these credits 2*.))) S4 6a&in' into consideration the hi'h level of the parameters imposed %y 8aster(ard for this type of productH in case of the unavaila%ility of the authori9ation system of the BRDH 8aster(ard >ill %e a%le to authori9e the operations >ithout consultation of the %an&. Ri*3 relate: to t.e non7reali9ation o/ t.e pro5ect .nternal ris s: . 6he lac& of coherence %et>een the action plan on the top clientele and the ris& also to lose a part of the relations >ith privile'ed customers to the profit of competin' %an&s that >ould offer %an& services adapted to their needs and sufficiently promotin'. . 6he ris& of not havin' other alternate to A8E\H that >ould force the %an& to enter into a ne> relation suppliers a lot more constrainin' and costly than the one >ith 8aster(ard and that of moreH >ould not e7empt the %an& from a card Gold 8aster(ardH considerin' the acceptance net>or& more reduces. <6ternal ris s< . 6he ris& to see our offer incapa%le to develop on , years and to adapt itself to our customers demandsH consequently a%andoned BRD cards to the profit of the competitors. translatin' today %y a rate of inactive cards of */F. 6his is
/#
Beatin0 t.e ri*3 /actor 6here is no such thin' as a ris&.free credit pro'ram %ut >ith 'ood mana'ement and controls in placeH >e can su%stantially reduce the threat of losses from %ad de%t. Ne' sales 6he num%er of re;ected accounts can %e limited %y careful tar'etin' of potential customers Applications Ensure policy rules and a scorin' system are in place from the start Re1ected applications 3ffer an alternative productH if possi%le Approved applications Issues to consider include credit limitsH pricin'H card e7piry date and ho> to >elcome ne> cardholders 8ransaction authori7ation Decide ho> far a cardholder can 'o a%ove the credit limit and ho> lon' transactions can continue if the account %ecomes delinquent *redit)limit mana+ement Esta%lish >hich customers should 'et increases or decreases in credit limitsH %y ho> much and >hen *ollections Set parameters for >hen telephone calls and letters should %e used and >hen a de%t should %e >ritten off *ard re)issue Decide >hose card 'ets declinedH >hose 'ets re.issued and >hen e7piry dates should %e
The credit card risk lifec cle
/*
Institut National de Developpement Economique &. 5&0AR$M&<$S C.<C&R<#<? != $@& 0R.A&C$ Department Strate'y and 8ar&etin'< in char'e >ith definition of functionalitiesH associated servicesH ta7esH determination of the customers tar'etH definition of 8ar&etin' 8i7 and administration of the relation >ith 8aster(ardH definition the parameters S6I+ 2Stand.In +rocessin'4. Department 8a]trise d03uvra'eH Department +ro;ect and 3r'ani9ation< assure support for the pro;ect in order to optimi9e I6 application. (ards Department< administrative of application. Definition of the criteria of follo> %y the ris& throu'h Ris&Net 2ris& monitorin' soft>are4H administration of the relation >ith I6 DepartmentH handlin' of the transactionsH reportin'H accountant mana'ement of the operations I6 Department< in char'e >ith the parameters of the cards in the systemH mana'ement of the data %asesH tests and certification >ith 8aster(ard. System maintenance and follo> the performances. Investment Department< selection of the producer of cards 2let us remind the relations of the Group >ith (+S 6echnolo'ies4 (R+@ 2(ollection Department4< Supervision 2and recovery4 credits 'ranted D(R 2Net>or& Department4< supervise the commercial activity of the net>or& :e'al Department< 3pinions of the issuin' contracts (ommunication Department< (ommunication product
/,

Conti Mihai Dan Consultancy Project1

Încărcat de

Informații document

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Conti Mihai Dan Consultancy Project1

Încărcat de

Drepturi de autor:

Formate disponibile

Institut National de Developpement Economique

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

Institut National de Developpement Economique

I. BRD Groupe Socit Gnrale and the economic environment

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

1. 1. Short History of BRD Groupe Socit Gnrale

1.2. BRD Groupe Socit Gnrale Profile

1.2.1 Retail banking

one of the leaders

to #)F accordin' to products.

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

Institut National de Developpement Economique

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

Institut National de Developpement Economique

1.2.2 Corporate banking

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

Source: BRD Annual Reports

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

Institut National de Developpement Economique

3. Socit Gnrale Profile

million customers in *) su%sidiaries coverin' #1 countries. It

Institut National de Developpement Economique

1.4. Key Figure of BRD Groupe Socit Gnrale

Source: BRD Annual Reports

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

Institut National de Developpement Economique

Source: BRD Annual Reports

Source: BRD Annual Reports

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

Institut National de Developpement Economique

Source: BRD Annual Reports

Source: BRD Annual Reports

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

Institut National de Developpement Economique

1.!. BRD Groupe Socit Gnrale Share

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

Institut National de Developpement Economique

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

Institut National de Developpement Economique

Source: BRD Annual Reports

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

Institut National de Developpement Economique

Source: BRD Annual Reports

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

Institut National de Developpement Economique

Source: BRD Annual Reports

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

Source< BRD Annual Reports

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

Institut National de Developpement Economique

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

Institut National de Developpement Economique

1.%. Standardi&ed Bu ine

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

Institut National de Developpement Economique

8ihai Dan (onti (onsultancy +ro;ect< =:aunchin' a ne> card product?

Institut National de Developpement Economique

Source: BRD Annual Reports

Institut National de Developpement Economique Total )alue o/ tranaction Dec. #<<=

%ro:uct 4ene/it* /or cuto+erH