stiff regulation
Lessors in Bulgaria are facing a new crackdown by the country’s
regulator that could result in some leasing companies closing
down.
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Under proposals announced last month lessors will have to
register with the Bulgarian National Bank (BNB) to continue
operating, meeting requirements relating to manager competence,
shareholder data, and origin of resources. The bill is currently
waiting to be voted past BNB’s board and then parliament.
“This opens the door for a certain kind of regulation,” said
Teodor Marinov, cochairman of the Bulgarian Leasing Association
(BLA) and chief executive of Interlease EAD, “but we will be able
to assess the depth of such effects once we see the bylaw.”
The bill has the potential to remove some of Bulgaria’s 400
Leasing companies from the market if they fall below the new
standards laid down by BNB.
It also represents a considerable extra burden in terms of
compliance for lessors. “Until now,” said Marinov, “leasing
companies were allowed to perform leasing activities by simply
notifying Bulgarian National Bank (BNB) of their intent to do
so.”
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However, the changes are unlikely to have a significant
effect on most lessors. “As we see it, for more than 95 per cent of
the market this will not be much of an issue,” Marinov added. “For
the remaining part that cannot prove competence or sources of
funding, we would rather they were not a part of our market.”
He went on to say: “The proposals will not materially affect the
volume or the quality of business, although some minor extra costs
could be incurred for registration and further compliance.”
The change will effect not just leasing companies but “any
entities other than banks that give loans not out of publicly
attracted or other refundable resources” – including pawn lenders,
exchange offices and credit companies, many of whom currently fall
under little supervision.
The Bulgarian Leasing industry has been in a state of rapid
growth since 2003, with new business for 2007 totalling €1.3bn – an
increase of 60 per cent since 2007.
Leasing penetration is assessed at around 12 per cent, with the
market divided between machinery and equipment (27 per cent),
consumer automotive (33 per cent), commercial automotive (29 per
cent) and real estate (8 per cent).
Interlease EAD is a fully owned subsidiary of National Bank of
Greece, with total assets approaching €550m. It expects growth of
50 per cent in 2008.
Fred Crawley
