Romania’s mixed fortunes see local investors keen to develop the market and a growing use of leasing by small businesses, especially in technology-related areas. Paul Golden reports.


Romania’s economy boomed in the decade after it joined the EU in 2007, but the country’s remarkable growth has started to slow in the last few years and the leasing market, which is largely made up of small to medium-sized businesses, has been affected by a variety of political, economic and environmental factors.

Now with coronavirus dominating the agenda: the government that was ousted in February has been voted back into power this month to deal with the virus, the challenges for the leasing market are greater than ever.

Recent comments from the IMF on the Romanian economy made before the coronavirus crisis were mixed, citing positive developments, such as above potential growth last year, strong wage growth and moderate public debt.

Unemployment reached record lows in 2019 and the financial sector was stable. However, inflation continues to gather pace, investment growth lagged broader economic activity last year and growth was expected to fall as the transitory effects of fiscal stimulus fade.

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Like every other market, Romania has struggled to reach pre-global financial crisis levels. Bob De Man, chief executive of Raiffeisen Leasing Romania stated that the local leasing market had a penetration rate in terms of overall GDP as high as 3.5% in 2008, falling to between 0.8% and 0.9% over the last decade.

“Financing volumes fluctuated between €4.9bn in 2007 to a low of €1.1bn in 2010 and an estimated €2.8bn in 2019,” he said. “In the last few years, in particular, the Romanian leasing market has experienced a very positive trend from year to year in tandem with the growth of the national economy.”

This trend was maintained in 2019, with a 10% increase in new business leasing volumes compared to 2018.

Local leasing trend

“The local leasing market is in a favourable situation with good macroeconomic indicators and an increasing desire among local investors to grow their businesses,” added De Man, commenting before the virus crisis. “Last year was a very good year for car financing, registering a double-digit increase, which corresponded to the evolution of car sales in Romania over the same period.”

He said it is worth noting the increasing share of construction vehicles and equipment financed in leasing given that construction works in Romania have been growing at the fastest pace in the EU.

“Another significant development of the market is the orientation of leasing companies to provide fast access to financing for customers through digitalisation, from the approval process all the way through to contract signing.”

De Man said his firm is satisfied with the performance of the leasing market in Romania in 2019 – which was in line with its estimations – and expects the positive dynamic to continue in the coming years in the context of largely favourable expectations for economic growth.

“The only concern is related to the high focus on car leasing, which implies a certain risk for the leasing companies’ portfolios,” he said.

“We believe that leasing companies should focus on dispersing the financing risk by trying to balance their portfolio between vehicles and equipment segments. We must keep in mind the fact that the Romanian leasing market registered a 72% decrease in 2009, under the conditions of business collapse in the car segment. Therefore we must be prudent.”

On the question of whether some sectors of the lease market are performing better than others, he echoes the sentiment expressed elsewhere that the leasing market reflects the economic reality and that any movement in the important sectors of the economy has an impact on leasing volumes.

Passenger cars are the predominant segment of the leasing finance market, representing more than 70% of leasing companies’ portfolios. Construction equipment financing increased in 2019, driven by large projects and investments in the construction field.

IT growth

Financing of IT and medical equipment registered a slight increase and although it was a drought year, there was still an increase in the volume of requests for financing of agricultural equipment.

But despite this increase, De Man is confident that there is scope of further growth in the provision of leasing services to the agricultural sector.

In contrast, registration of new trucks was down 10% last year – 6981 trucks over 16 tonnes were registered in Romania in 2019 compared to 7736 in 2018.

“Given the growing role digital plays in peoples’ lives it is important to align the company’s services and product with client needs and demands,” said De Man.

“The most notable technological achievement we have made is the transition to the electronic signature of the leasing contract. This means we do not have to archive a large number of documents on paper and customers are excited because they save a lot of time.”


Raiffeisen Leasing supports the development of the leasing market through a diversified range of products and services. In 2019 it launched financing through the European guarantee programme COSME.

COSME is the EU programme for the competitiveness of enterprises and small and medium-sized enterprises running from 2014-2020 with a planned budget of €2.3bn.

Part of the programme’s budget funds guarantees and counter-guarantees for financial intermediaries (such as leasing companies) to help them provide more loan and lease finance to SMEs. This facility also includes the securitisation of SME debt-finance portfolios.

The financing granted by Raiffeisen Leasing under the framework of this programme benefits from European Investment Fund support to accelerate the development of small and medium-sized companies.

For both car and equipment leasing, partnerships with vendors and dealers continue to play a key role in the leasing market, adds De Man.

“We have a strong collaboration with local and international vendors and dealers for cars, trucks and trailers and equipment with important advantages for customers in the form of extended guarantees for the financed goods, road-side assistance and other services,” he said.

“The SME financing product financed through funds provided by the Council of Europe Development Bank continues to produce great results in terms of creating and maintaining jobs for small and medium-sized companies in Romania to support wider economic growth.”

Other significant developments in the lease market over the last 24 months include the wider use of leasing by small businesses and the expansion of lease activity in technology-related areas.

Distribution diversity

The diversification of distribution channels is another important evolution as leasing companies affiliated with banking groups approach their clients from the perspective of what they need rather than the product, said Nina Puiu, secretary general Association of Financial Companies (ALB Romania).

She agreed that vehicle leasing remains the dominant market segment, although leasing of construction equipment lease has expended due to the accelerated pace of building projects, she added. “Leasing companies are also interested in financing agricultural, medical and IT equipment.”

According to Puiu, dialogue between its members and state authorities, clients and other professional associations is the basis for ensuring that the product offered by members is competitive. Legislative stability is particularly important.

She is confident that the lease market will continue its upward trend by diversifying the types of equipment financed.

In January, Romanian president Klaus Iohannis and the country’s prime minister, Ludovic Orban, announced that they had started the process of organising a general election to take place at the same time as elections for the local administration, at the time of publishing these were scheduled to take place in May this year.

“The general economic and legislative framework will have a significant impact since 2020 is a year with local and parliamentary elections in Romania,” said Puiu. “The private sector is interested in legislative stability and the encouragement of investment.”

Performing sectors

The agricultural, chemical, electronics, financial services and foods services sectors have performed well over the last 12 months while from a credit risk perspective, other industries including transport, metals and textiles are expected to grow.

That is the view of Lionel Piquel, country manager Romania at BNP Paribas Leasing Solutions, who said his company has benefited from growth in demand for leasing from the agricultural sector and is exploring the potential of IT and medical leasing.

“Recent market growth has been based on macroeconomic consolidation,” he said. “The lease market has developed strongly in the agricultural sector, with Romania now in the top 10 European countries in terms of cultivated and cultivable agricultural areas. There are some areas in stagnation, but that have the potential to develop in the years to come.”

Piquel said customers are increasingly focusing on the quality of the services offered and not just the price. “We are constantly adapting our solutions to these market trends and concentrating on making services more visible and in doing so strengthening the relationships with our partners and building on our existing expertise.”

In addition to growing demand for leasing from small and medium-sized companies, Frédéric Banco, chief executive of BRD Sogelease refers to high levels of liquidity in the market and low levels of non-performing loans driving strong profitability, which he describes as a reflection of the larger context of the Romanian banking system.

His firm’s focus has been on the integration of digital technology into its processes as a means of simplifying and improving the customer experience as well as making leasing business more efficient and therefore more sustainable.

“The high liquidity environment has made financers more active in the lending market, with the traditional distinctions between various debt products or segments fading away,” adds Banco.

“We hope that all these developments have facilitated customers’ access to capital and helped improve their perception of leasing, as this is the ultimate source of our long term development.”

He noted that demand for leasing has benefitted from growth in the number of companies that are profitable, have adopted a positive outlook on their future and therefore decided to invest.

“This has created the platform for us to improve our value proposition, move closer to clients and make SMEs appreciate the accessibility and flexibility of leasing over other financial solutions.”

Banco said that while making leasing easily available to as many companies as possible and supporting customers in their development plans has traditionally been about providing access to capital, it is now more about facilitating access to the latest technological solutions and know-how, made available in conjunction with vendor partners.

Automotive growth

In line with the positive macroeconomic outlook for the country (at the time of writing), he has a positive view on the growth potential of the Romanian lease market while acknowledging that the growth rate will reduce as the country starts to feel the impact of various uncertainties.

“The technological shift in the automotive market – combined with new anti-pollution regulation – may push down car sales,” he said.

“The slowdown in industrial output may reduce trade and negatively influence the transportation and logistics sector, while agriculture is strongly correlated with weather conditions which have become less predictable. This is why we are keen to maintain strong risk governance.”

A spokesperson for BCR Leasing IFN, which is part of Erste Group’s Romanian banking subsidiary, (speaking about his company’s plans before the virus was a factor) said it plans to increase its business volumes in 2020 over the market average for all categories including passenger cars, commercial vehicles, equipment and machinery.

“Over the last few years we have provided financing services in all areas of the country’s economy, which have been brought to clients using both our distribution network and that of our partners (dealers, brokers, importers),” he concluded.

“At the same time, investments made in IT infrastructure have shortened the time of response to clients’ financing applications.”