CIRA Creditul Ipotecar Romano American

1
CIRA Creditul Ipotecar Romano - American

• Presentation
• Mortgage Lending Conference
• Bucharest, April 1, 2003

2
History

• Resulted from collaboration of 2 companies
  Romanian American Enterprise Fund (RAEF) and
  ShoreBank Advisory Services (SAS).
• USAID supplied USD 1.277 million in technical
  assistance to SAS for the project while RAEF
  supplied USD 3 million in initial capital
• First loan was disbursed on 29.03.2002 on the
  books of RAEF
• Lending proceeded at low level for rest of 2002
  (no advertising) to test products and procedures
• Law 200 passed in December 2002, allowing
  creation of Romanias first non-bank,
  mortgage-lending institution
• Company officially formed on February 27th, 2003
• As at March 31,2003 8 credit staff, legal
  advisor, secondary market specialist, accountant,
  2 back office staff
• EBRD, DEG, IFC have all committed funds to the
  project

3
Our Philosophy

• To make the mortgage lending process as
  transparent as possible for our clients.
• This means
• Treating all potential clients with respect if
  they only have 150 monthly salary now and are
  young and bright next year they could have a
  300 salary we want them to remember us
• Making sure clients know about all costs at the
  beginning of the process not only our fees but
  notary and other fees not CIRA related thus,
  there will be no surprises on closing day
• Be as efficient as possible in order not to waste
  the clients time and our time. Our average time
  between receiving client application and
  supporting documentation and approval is 2 days.
• Not requiring from clients things that are
  irrelevant to determining a clients
  creditworthiness such as a pre-contract.

4
Our Goals

• NOT TO BECOME THE NUMBER 1 MORTGAGE LENDER IN THE
  MARKET IN TERMS OF SIZE,
• We do, however, want to become the most
  efficient and profitable player in the primary
  market by focusing on effective delivery of our
  service
• Further, aside from being a best practices
  primary market player, we want to be a catalyst
  for the development of a secondary refinancing
  market in Romania through the issuance of
  mortgage backed bonds or MBS
• We would welcome dialogue with other mortgage
  lending institutions with the aim of
  standardizing products and procedures with the
  view of securitizing mortgage portfolios this
  appears to be the best way to obtain a supply of
  long term financing which is vital to the growth
  of the industry

5
Operating Results to DateAs at March 27/2003
6
Client Profile

• Average Loan Size 13,000 (approx.)
• Average Age 33
• youngest 22
• oldest 54
• Where Employed Romanian owned company 41
• Foreign owned company 59
• Av. Monthly Family Income 945
• lowest 275
• Male 56 / Female 44

7
Our Backers

• USAID - 1.277 million in technical assistance to
  finish by Sept/03
• SAS Technical assistance implementer chosen by
  USAID/finish by Sept/03
• RAEF 3.2 million in equity first and main
  equity partner
• Raiffeisen Bank - 7 million in debt
• DEG 1 million in equity 6 million in debt
• EBRD 1 million in equity 5 million in debt
• IFC - 1 million in equity and 5 million in debt

8
Where We See the Market

• For smaller loans
• Mainly individuals, families who work for
  Romanian companies that have combined monthly
  salaries above 300
• Although it would be nice to have clients who
  work for foreign companies with high incomes
  registered in the work book, this will be the
  situation in a minority of cases. In order to
  reach a broader audience/market, we must go
  beyond this to Romanians who have jobs for local
  companies
• For Larger loans
• The larger the loan, the more likely the
  applicant will be a small businessperson or
  entrepreneur as not so many Romanians have
  sufficient employment income to support larger
  loans
• For example, for a 100,000 loan the monthly
  payment with be roughly 1,350. In order to
  support this loan the net family income must be
  at least 2,700. Although it is possible that a
  minority of Romanians have this amount of
  employment income, the majority in this category
  work for themselves

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What Does This Mean

• We must be good at evaluating risks and
  creditworthiness, especially for larger clients
  as our experience to date has been that family
  income tends to be non-standard!!
• This means appropriate business analysis skills
  must be developed amongst the loan officers
• For smaller loans it means accepting the risk
  that employment income may be sufficient, but
  come from smaller firms (s.r.l.s).
• Again, in some cases we should look at the
  business behind the employee to ensure that it is
  solvent

10
Next Steps

• We want to increase our pool of loans to an
  amount sufficient to have an MBS or mortgage bond
  offering
• We want to partner with other banks to ensure
  that a secondary market in mortgage s is viable
  in Romania within the next two years
• Multumesc!!

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Our Location

• Pache Protopopescu 45
• Sector 2
• Bucharest
• Please visit us
• we will be glad to see you
• 0900 1800 Monday-Friday
• Parking for up to 8 cars on-site!!!