News

Daily Newsletter - 28 June 2022

Summary

FIC (1)
Macroeconomic (3)
Financial (4)
Investment (4)
Legislative (2)
European News (1)
Social (1)
FIC 
Foreign Investors Council has re-elected the organization’s management team
During the first meeting of the new mandate, FIC Board of Directors re-elected the organization’s management team remaining consistent with the same vision for economic sustainable development. Cristian Secoșan continues a new mandate as FIC President, together with Vice Presidents Ramona Jurubiță and Eric Stab, and Daniel Anghel as Treasurer. FIC will continue to address strategic themes for the Romanian economy and provide recommendations for medium and long-term measures aligned with the European good practices, but at the same time, it is ready to formulate position papers based on the expertise and practical knowledge of experts from the member companies and to react in an agile manner to the current challenges. The FIC Board of Directors maintains on the agenda the fundamental themes for Romania’s development: attracting investments, stability and predictability of the fiscal regime, strengthening the resilience of the energy sector, implementing sustainable measures in business plans, environmental protection, ensuring the population’s welfare and health, technological development, and implementing digital processes.
Macroeconomic 
Record high inflation in euro area shows no sign of decrease
The normalization efforts imposed by the European Central Bank will increasingly dissipate in 2023, before the effective monetary policy rate reaches a neutral level. Apart from the increases generated by energy prices, the supply chain bottlenecks and the geopolitical uncertainty, growing risks of euro area fragmentation will affect the ECB’s normalization plans. Given that the US Federal Reserve will have more moderate growth ambitions in 2023, it will become harder for the ECB to oppose the trend and stay on its normalization path. Therefore, two key rate hikes are projected for 2023, both expected in the first half of the year.
Private lending grew by 16.5% in May compared to the same period of 2021
Private lending grew by 16.5% in May compared to the same period of 2021, the total balance having reached RON 345.2 billion, after RON-denominated loans increased by 20% and foreign currency-denominated ones, expressed in RON, rose 8.2%, according to data transmitted by NBR on Monday. The year-on-year growth rate had been 15.8% in April and 15.7% in March. In real terms, the balance of loans grew by 1.8% year-on-year in May 2022, amid the 4.8% advance of the RON-denominated component and the 7.6% increase in the foreign currency-denominated one, if the indicator is expressed in euro.
Ministry of Economy launches state aid scheme
The Ministry of Economy has put up for public consultation the Decision on the establishment of a state aid scheme aimed at providing grants for investments in the manufacturing industry. The main objective of the state aid scheme proposed by the Ministry of Economy is to provide grants for initial investments or for an initial investment for a new economic activity in the manufacturing industry. It will be implemented based on the financing agreements issued by the Ministry of Economy until 31 December 2023, and the state aid will be paid during the period 2022-2027, within the limit of the annual budget allocated to the scheme, the RON equivalent of EUR 150 million.
Financial 
ING supported about 320 sustainable transactions at global level, in 2021
Sustainability is a trend that companies and the financial-banking environment must increasingly follow. Important steps in this direction are being taken both by banks and by the business environment in Romania. Ștefan Dinu, Head of Lending, Wholesale Banking Division, at ING Bank Romania, has stated that ING supported about 320 sustainable transactions at global level, in 2021, up by 250% compared to 2020. In Romania, the first green loan was granted in 2021, and since then the bank has been involved in approximately EUR 250 million such transactions.
CEC has increased interest rate on one-year household deposits from 4.6% to 6%
On Monday, CEC Bank launched a one-month promotional offer to attract people’s savings by increasing interest rates on deposits depending on maturity. As a result, the interest rate for one-year deposits has increased from 4.5%-4.6% to 6%, and the one for the three-year maturity has grown from 5-5.1% to 6.5%. Interest rate for one-month deposits has got from 2-2.1% to 3.5% Banks are competing to attract people’s savings given the extremely tense situation on the interbank market, where NBR’s tougher monetary policy has led to a reduction in available liquidity.
Banca Transilvania developed, adopted and scaled FLOWX.AI technology on existing systems
Banca Transilvania, through its technical team, has developed, adopted and scaled the FLOWX.AI technology on existing systems. It is a cloud-native platform, which allows the bank to permanently increase its agility, translated especially in the speed of response in customer relations, according to a press release. It is also the main solution used by BT for the digital transformation of internal processes.
EBRD expressed its optimism about the development of local and regional insurance market
The European Bank for Reconstruction and Development (EBRD) has expressed its optimism about the development of the local and regional insurance market, following the record results obtained by Euroins Insurance Group (EIG) in Bulgaria in 2021, guided by the strong performance of its biggest entity, Euroins Romania Asigurare Reasigurare. EIG is one of the largest independent general insurance groups in Central, Eastern and South-Eastern Europe. Last year, the EBRD acquired a minority stake in the group to support the development and growth of its Romanian unit, committing to invest €30 million through a capital increase. Еurohold, the insurance group’s parent company, committed to provide a new €12 million capital injection.
Investment 
Medima Health has opened a new clinic in Braila
Medima Health, a network of clinics specializing in medical imaging and radiology, has opened a clinic in Braila, a EUR 1.5 million investment, according to company officials. The new clinic offers CT and MRI imaging services. Medima has thus reached eight clinics on the local market. Medima Health centers ended 2021 with a RON 14 million turnover, compared to RON 3 million in the previous year, according to mfinante.ro. In the past two years, following the takeover by Morphosis Capital investment fund, Medima centers have constantly expanded, being present in Bucharest, Alba Iulia, Călărași or Sibiu.
Former Cisnădie carpets factory in Sibiu turns into a retail park
Real estate developer Zacaria, part of the international group Alf Mizzi & Sons, founded in Malta, is to open a retail park in the town of Cisnădie in Sibiu, in the second half of next year, following an over EUR 11 million investment. The project will be developed through the reconversion of the former Cisnădie carpet factory, on a total area of 11,500 square meters, and will include a 9,000 square meter leasable area and a supermarket anchor, according to data transmitted on Monday by real estate consultancy firm CBRE Romania, which manages the leasing activity within the project and has already started the process of leasing the commercial spaces.
New Aniroc Signature Hotel was inaugurated in Arad at the end of last week
The new Aniroc Signature Hotel, an investment made by the Cosma and Țucudean families, was inaugurated in Arad at the end of last week. BRD Groupe Société Générale participated in the project with a EUR 4 million long-term financing, the bank has announced. The Aniroc Signature Hotel, which is located in the center of Arad, combines industrial and modern styles, while preserving the touch of Arad’s past.
Transformer substation (110/20kV) in Vicov, Suceava County, will be modernized
The transformer substation (110/20kV) in Vicov, Suceava County, will be modernized by replacing some high and medium voltage equipment and by integrating it into SCADA (remote control and data acquisition). Moreover, the 110 kV Vicov - Rădăuți power line will be modernized over a length of 17 km and new connections will be established between Vicov, Rădăuți and Egger stations to increase supply reliability. The main objective of the works is to take over energy produced from renewable resources in conditions of safe operation of the National Energy System (NES), to reduce the own technological consumption (OTC), to improve the performance indicators of the electrical power distribution service, namely the technical quality parameters of distributed energy and the electricity supply continuity indicators.
Legislative 
President Klaus Iohannis challenged at CCR a law concerning stray dogs
On Monday, 27 June 2022, President Klaus Iohannis challenged, at the Constitutional Court of Romania (CCR), the law amending and completing Government Emergency Ordinance 155/2001 on the approval of the stray dogs management program. Among other things, the Head of State indicated that the removal of the sanction for failure to vaccinate dogs – both stray and non-stray ones - deprived the state of the sanctioning instrument necessary to protect public health against the spread of the rabies virus.
President Klaus Iohannis promulgated the law approving OUG 113/2021
On Monday, 27 June 2022, President Klaus Iohannis promulgated the law approving Government Emergency Ordinance (OUG) 113/2021 completing Government Ordinance 45/1997 on the establishment of the Company "Compania naţională de transporturi aeriene române - TAROM" - S.A. ("Romanian National Air Transport Company - TAROM" - S.A). The normative act creates the legal framework allowing the Government to approve the amount, form and conditions for granting an individual restructuring state aid to TAROM, thus ensuring the successful implementation of the restructuring plan targeting the company’s medium and long-term profitability.
European News 
US funds study for small reactor deployment in Romania
The US government committed USD 14 million for an engineering and design study that would provide the basis for deploying small modular reactors (SMR) for a new nuclear plant in Romania. The Front-End Engineering and Design (FEED) study is expected to be completed in eight months, following an investment of USD 28 million, including contributions from Romanian nuclear power firm Nuclearelectrica and NuScale, the US company that provides the SMR technology. Romania selected the site of a former coal-fired power plant to host the first SMR power plant, and the study will provide key site-specific data – cost, construction, schedule, and licensing details – necessary for the deployment of NuScale’s reactors, the White House said on Sunday, 26 June.
Social 
Life expectancy at birth in Romania in 2021 fell to the level recorded 14 years ago
Life expectancy at birth in Romania in 2021 fell to the level recorded 14 years ago, in 2007, while other European countries managed, after the first year of decline, to return to levels close to those recorded before the pandemic, according to data from the Friedrich Ebert Romania Foundation. In the entire Europe, after more than two decades of growth, life expectancy saw a significant decline in the two years of the pandemic, according to an infographic on the evolution of life expectancy in 2020-2021.