The Financial Companies Association – ALB Romania
1. Leasing Legislation at the Cross Road of
EU Directives and Countries' EU accession policies
2. Romanian Leasing Market – June, 2011
Adriana Ahciarliu
Secretary General
www.alb-leasing.ro
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
1
Leasing Legislation at the Cross Road of
EU Directives and Countries' EU accession policies
 Perception versus tradition:
 What is leasing? Asset financing or delivery of
goods?
 How should it work? Under special leasing
legislation? Under Central Bank Supervision? Free
under provisions of Civil Code or Commercial law?
 Are there criteria that make the difference?:
 Corporate governance?
 Accounting standards?
 Is there need for border between financial &
operational leases?
 Does fiscal treatment matter?
 What matters more: the lessor or the lessee?
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
2
Leasing Legislation at the Cross Road of
EU Directives and Countries' EU accession policies
 Some legal framework examples:
Form
Distinction
requirments for
Subject to civil
option to
Specific legal
between
companies
or comercial
purchase given form for leasing
operational and
performing
law
to the lessee
companies
financial leases
financial
leasing
Banking
supervision
Direction EU /
non EU foreign
lessors
Special
approvals
Remarks
no
irrelevant
not specified
not specified
not specified
Lack of a specific body of
law dealing with lease
agreements, questions are
resolved by the judicial
process
Belgium
Distinction
between full payout lease,
Commercial &
operational lease
specific leasing
yes
and hire
legislation
purchase, based
on very strict
criteria
no
irrelevant
not specified
no
not specified
Legislation restricts leasing
only to companies
Denmark
Neither, treated
as rental for
no
legal purposes
no
irrelevant
not specified
no
not specified
Austria
Civil
France
Both, banking
law for creditbail
no
No; distinction
between
"location
simple" and
"credit-bail"
not specified
not specified
registration as when option to
financial
purchase,
Yes (credit-bail)
institution
regulations from
no (location
yes
no
no
Source/Sursa:
compulsory
for banking andASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
simple)
carrying on
financial law
credit-ball
apply
3
Leasing Legislation at the Cross Road of
EU Directives and Countries' EU accession policies
 Some legal framework examples:
Form
Distinction
requirments for
Subject to civil
option to
Specific legal
between
companies
or comercial
purchase given form for leasing
operational and
performing
law
to the lessee
companies
financial leases
financial
leasing
Germany
Netherlands
Sweden
"Purchase option
in favor of the
lessee comes
into
consideration in
Civil, no specific
no; distinction
case of full
body of law so
between
payout contracts
far, Lease
installment sales (mobile) or real
contracts are
no
(if transfer of
estate. The
basically
econ.ownership purchase price
regarded as
to the xxx
corresponds
rental contracts
either to the
residual book
value or, if
lower, the
market value"
No specific law yes
No Civil law
governing
leasing, 1998
proposal for a
specific leasing
legislation
yes
in financial
leases only
yes
no
no
Banking
supervision
Direction EU /
non EU foreign
lessors
Special
approvals
irrelevant
"no; but indirect
supervision of
bank owned
companies when
they consolidate
their activities
not specified
with those of
their parent
comp. for the
purposes of
group
supervision"
no
no
no
no
not specified
Remarks
in most cases the parties
prefer treatment as a rental
contract for tax-purposes
Yes, only EUlessors who are
only financeASOCIATIA
Swedish Finance
supervised by
Source/Sursa:
SOCIETATILOR
FINANCIARE
– ALB ROMANIA
Swedish FSA
companies
Sup. Authority their home-state
FSA are entitled
to fin. Lease
4
Leasing Legislation at the Cross Road of
EU Directives and Countries' EU accession policies

Consequences of adopted legal framework:







fiscal treatment – financial service for regulated framework
under Central Bank; delivery of asset taxed at residual value;
pure rental for operational leases
accounting standards - IFRS for regulated by Central Bank; local
standards for operational leases
loss & profit results, capital adequacy rules, prudential regulation
– for regulated framework under Central Bank
Product accessibility – less accessible in case of regulated
framework under Central Bank – consequently less assumed
risk!
Product depreciation or appreciation as compared to pure
credit???? Depending on local market perception!!
Product depreciation or appreciation as compared to pure
rental???? Depending on local market perception and history!!!
Market awareness
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
5
Leasing Legislation at the Cross Road of EU Directives and
Countries' EU accession – Case of Romania
 Leasing legal framework before
country’s accession to EU:
 Leasing law defining the terminology
 Tax incentive: custom duties to be applied
at a maximum RV of 20% at the
termination of contract
 No rule of authorization
 No supervision of central bank
 Romanian accounting standards for LTD
companies
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
6
Leasing Legislation at the Cross Road of EU Directives and
Countries' EU accession - – Case of Romania
 Leasing legal framework after legal harmonizing with
EU legislation :
 Leasing law updated to some EU practice – no
compulsory EU Directive!!
 Fiscal separation between financial and operational
leasing – there is the VAT Directive offering the
framework of VAT treatment according to country’s
decision to treat leasing as financial service or delivery
of goods
 Supervision of financial leasing by Central Bank –
operational leasing stays as rental activity under
provisions of Commercial Law
 Banking Romanian accounting standards for financial
leasing (very similar to IFRS), Romanian accounting
standards for operational leasing contracts.
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
7
Leasing Legislation at the Cross Road of EU Directives and
Countries' EU accession – Case of Romania
 Leasing legal framework after
country’s accession to EU:
 Romania has followed the example of Italy
& UK with double standard supervision
( small versus big leasing company)
 VAT treatment for financial leasing =
financial service = VAT EU Directive for
credit activity
 E.U. Customs Code
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
8
Leasing Legislation at the Cross Road of EU Directives and
Countries' EU accession – Case of Romania
 What happens after harmonization?– is
EU a support for lobbying better &
healthier business environment?
 Infringement procedure is an efficient
support towards correct harmonization
and implementation of EU legislation at
the level of EU member states;
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
9
Leasing Legislation at the Cross Road of EU
Directives and Countries' EU accession

Is EU a support for lobbying better & healthier business
environment?




Explanation of procedure for non-compliance with European Union
law
Principles
Each Member State is responsible for the implementation (transposition
by the deadline, conformity and proper application) of European Union
law in its internal legal system. The European Commission ensures that
European Union law is properly applied. Consequently, where a Member
State fails to comply with European Union law, the Commission has
powers of its own (action for non-compliance) which it may use in an
attempt to terminate the infringement and, if necessary, it may refer the
case to the Court of Justice. The Commission takes whatever action it
deems appropriate whether in response to a complaint or after detecting
indications of infringements itself.
Non-compliance means failure by a Member State to fulfill its obligations
under European Union law. It may consist either of action or omission.
The term State is taken to mean the Member State which infringes
European Union law, irrespective of the authority - central, regional or
local - to which the non-compliance is attributable.
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
10
Leasing Legislation at the Cross Road of EU
Directives and Countries' EU accession
 Is EU a support for lobbying better &
healthier business environment?

Admissibility of complaints
To be admissible, a complaint has to relate to an
infringement of European Union law by a Member
State. It cannot therefore concern a private
dispute. It is very important for the complaint
papers to be complete and accurate, particularly
as regards the facts complained of in relation to
the Member State in question, any steps which
you have already taken at any level and, as far as
possible, the provisions of European Union law
which you consider to have been infringed and
any involvement of a European Union funding
scheme.
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
11
Leasing Legislation at the Cross Road of EU
Directives and Countries' EU accession

Is EU a support for lobbying better & healthier
business environment?
Stages of infringement proceedings
 Research phase
 Opening of infringement proceedings: formal
contacts between the Commission and the
Member State concerned:

If the Commission considers that there may be an
infringement of European Union law which warrants the
opening of infringement proceedings, it will address a
"letter of formal notice" to the Member State concerned,
requesting it to submit its observations by a specified
date. The Member State has to adopt a position on the
points of fact and of law on which the Commission bases
its decision to open the infringement proceedings.
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
12
Leasing Legislation at the Cross Road of EU
Directives and Countries' EU accession
 Is EU a support for lobbying better & healthier business
environment?
 In the light of the reply or absence of a reply from the
Member State concerned, the Commission may decide
to address a "reasoned opinion" to the Member State,
clearly and definitively setting out the reasons why it
considers there to have been an infringement of
European Union law and calling on the Member State to
comply with European Union law within a specified
period (normally two months).
 In the light of the reply, the Commission may also
decide not to pursue the infringement proceedings any
further, for example where the Member State provides
credible assurances as to its intention to amend its
legislation or administrative practice. Most cases can be
resolved in this way.
 The procedure ensures confidentiality of source.
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
13
The Financial Companies Association – ALB Romania
Financial Leasing Market in Romania
H1 2011
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
14
Evolution of Non Performing Loans from Total Granted Credits
Evolutia creditelor neperformante din total credite acordate
35.0%
31.6%
29.8%
27.8%
30.0%
29.0%
27.4%
25.0%
28.5%
27.5%
23.2%
25.5%
21.6%
20.0%
17.9%
15.0%
13.2%
10.0%
12.5%
15.1%
13.6%
13.8%
5.0%
Jun-11
Apr-11
Feb-11
Dec-10
Oct-10
Aug-10
Jun-10
Apr-10
Feb-10
Dec-09
Oct-09
Aug-09
Jun-09
Apr-09
Feb-09
Dec-08
Oct-08
Aug-08
Jun-08
Apr-08
Feb-08
Dec-07
Oct-07
Aug-07
Jun-07
0.0%
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
15
Growth rates / Rate de crestere
European Financial Leasing Market / Piata de leasing financiar in Europa
H1 2010 vs. H1 2011
LV
128.5%
140.0%
120.0%
RU
101.3%
100.0%
EE
70.8%
80.0%
BG
45.0%
60.0%
40.0%
BE
19.4%
20.0%
PL
27.5%
AT
25.0%
DE
CH CZ 14.4%
9.6% 16.1%
HU
FI
FR
11.3%
10.4% 10.1%
IT
-2.6%
NL NO
9.1% 14.4%
RS
32.4%
RO
22%
SK
32.6%
SI
SE
-3.6%
-1.9%
UK
5.3%
0.0%
-20.0%
ES
-23.9%
-40.0%
GR
-51.7%
PT
-34.4%
-60.0%
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
Source: Leasurope
16
1,0
1,5
2,0
2,5
3,0
3,5
50
00
00
00
00
00
00
0,0
,0 0
,0 0
,0 0
,0 0
,0 0
,0 0
0
0
0
0
0
0
0
0
0
(000 euro)
Financial Leasing Market Evolution (Biannual Growth Rates) in Romania
Evolutia pietei de leasing financiar (cresteri semestriale) in Romania
H1 2005- H1 2011
1,484,822
1,131,779
776,653
543,719
22%
663,314
507,149
296,450
152,197
56,593
H1 2006
338,992
109,320
17%
69%
117,307
177,54%
H1 2007
TOTAL
H1 2008
Equipment/Echipamente
H1 2009
Vehicles/Vehicule
95,407
H1 2010
-15%
397,756
184,220
81,338
H1 2011
Real Estate/Imobiliar
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
17
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Romanian Financial Leasing Market - Weight per Good Segment /
Piata de Leasing Financiar in Romania - Ponderea segementelor in total finantari
H1 2005 - H1 2011
81%
76%
71%
71%
65%
17%
2%
H1 2005
20%
4%
H1 2006
22%
7%
H1 2007
Equipment/Echipamente
22%
62%
60%
20%
20%
28%
15%
18%
12%
7%
H1 2008
H1 2009
Vehicles/Vehicule
H1 2010
H1 2011
Real Estate/Imobiliar
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
18
Romanian Financial Leasing Market Structure by Type of Lessor/
Piata de leasing financiar din Romania dupa categoria societatilor de leasing
H1 2009 ÷ H1 2011
70%
65%
64%
60%
60%
50%
40%
28%
22%
30%
20%
20%
15%
14%
12%
10%
0%
H1 2009
H1 2010
BANK`S SUBSIDIARES/ Subsidiare banci
CAPTIVE/ Captive
H1 2011
INDEPENDENT/ Independente
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
19
Romanian Financial Leasing Market Structure by Origin/
Piata de leasing financiar din Romania dupa originea bunului
H1 2009 ÷ H1 2011
92%
100%
90%
78%
71%
80%
70%
60%
50%
40%
30%
14%
22%
10% 12%
20%
8%
0%
10%
0%
H1 2009
H1 2010
Domestic RO
Domestic EU
H1 2011
Import
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
20
Romanian Leasing Market Structure by Acquisition Type/
Piata de leasing din Romania dupa tipul achizitiei
H1 2009 ÷ H1 2011
86%
82%
79%
90%
80%
70%
(000 Euro)
60%
50%
40%
18%
21%
30%
14%
20%
10%
0%
H1 2009
H1 2010
BRAND NEW / Noi
H1 2011
USED / Second Hand
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
21
Romanian Financial Leasing Market Structure by Customer Type/
Piata de leasing financiar din Romania dupa categoria utilizatorului
H1 2009 ÷ H1 2011
100%
95%
91%
89%
90%
80%
70%
60%
50%
40%
30%
20%
7%
9%
2%
4%
1%
2%
10%
0%
H1 2009
H1 2010
CORPORATE/ Companii
RETAIL / Retail
H1 2011
PUBLIC / Public
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
22
Romanian Financial Leasing Market Structure By Contract Duration/
Piata de Leasing Financiar din Romania dupa durata contractului
H1 2009 ÷ H1 2011
30%
30%
26%
24%
25%
20%
19%
20%
(000 euro)
26%
20%
19%
23%
23%
20%
16%
15%
9%
10%
4%
5%
8%
4% 4%
5%
0%
1 YEAR/ 1 an 1 - 2 YEARS/ 2 - 3 YEARS/ 3 - 4 YEARS/ 4 - 5 YEARS/ > 5 YEARS/ >
1-2 ani
2-3 ani
3-4 ani
4-5 ani
5 ani
H1 2009
H1 2010
H1 2011
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
23
Romanian Leasing Market Equipment Financing/
Piata de leasing din Romania finantarea echipamentelor
H1 2010 Vs. H1 2011
H1 2011
O thers
19%
Construction
17%
Car Service
4%
Metal processing
4%
Agriculture
22%
Electrical devices
14%
Medical
6%
Food & Beverage
7%
Wood processing
O ffice + IT 3%
4%
H1 2010
Construction
14%
Others
34%
Metal processing
5%
Food & Beverage
4%
Wood processing
2%
Office
1%
Plastics & Rubber
1%
Chemical Industry
3%
Medical care
8%
Car S ervice
1%
IT
8%
Printing & Packaging
Petroleum & Derivatives
1%
2%
Agriculture
Electrical devices
13%
1%
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
24
Romanian Financial Leasing Market Vehicle Financing/
Piata de leasing financiar din Romania finantarea vehiculelor
H1 2009 ÷ H1 2011
60%
58% 57%
56%
50%
40%
30%
25%
30%
19%
17%
20%
16%
13%
6%
10%
2%
1%
0%
PASSENGERS CARS/
Autoturisme
LIGHT CO MMERCIALS / HEAVY CO MMERCIALS/ O THERS/Alte ve hicule
Ve hicule Come rciale
Ve hicule Come rciale
Usoare
Gre le
H1 2009
H1 2010
H1 2011
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
25
Romanian Financial Leasing Market Real - Estate Financing/
Piata de leasing din Romania - finantarea sectorului imobiliar
H1 2009 ÷ H1 2011
70%
65%
60%
50%
40%
39%
40%
31%
31%
30%
18%
22%
18%
20%
10%
0%
1% 0% 1%
5%
5% 5%
5%
7% 7%
0%
INDUSTRIAL /
Industriale
OFFICE
HOTEL / Hoteluri
H1 2009
RETAIL OUTLETS
H1 2010
RESIDENTIAL/
Rezidential
LAND/ Teren
H1 2011
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
26
Real Estate Financing By Duration of the Contract /
Finantarea bunurilor imobiliare dupa durata contractului
H1 2009 ÷ H1 2011
100%
89%
95%
90%
77%
80%
(000 euro)
70%
60%
50%
40%
30%
20%
20%
10%
8%
0% 0% 1%
0% 1% 1%
0% 1% 1%
0%
0%
5% 1%
0%
1 YEAR/ 1 an 1 - 2 YEARS/ 2 - 3 YEARS/ 3 - 4 YEARS/ 4 - 5 YEARS/ > 5 YEARS/ >
1-2 ani
2-3 ani
3-4 ani
4-5 ani
5 ani
H1 2009
H1 2010
H1 2011
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
27
Real-estate Financing by Customer Type/
Finantarea bunurilor imobiliare dupa categoria utilizatorului
H1 2009 ÷ H1 2011
100%
100%
100%
100%
90%
80%
70%
60%
50%
40%
30%
20%
0%
0%
0%
0%
0%
10%
0%
0%
H1 2010
H1 2009
CORPORATE/ Companii
RETAIL / Retail
H1 2011
PUBLIC / Public
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
28
The Financial Companies Association – ALB Romania
Thank you!
www.alb-leasing.ro
Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA
29