The ability to "survive" is part of the Moldovan business DNA

Interview with Dumitru Svinarenco, CEO of Microinvest and Pavel Zingan.

Hello, Dumitru. In the current crisis, bank executives avoid commenting. However, credit organizations, being smaller, are more receptive and open to communication. So, thank you for agreeing to give an interview right now.

Pavel, it’s no problem. However, I would like to clarify the measure. Do you know the total amount of the Microinvest loan portfolio?

I recognize. Unfortunately, I did not specify before our discussion…

MDL 1 billion 960 million. If we put Microinvest Microinvest in the rating of banks, our company would be on the sixth place in Moldova, according to the loan portfolio.

Then our discussion becomes even more interesting. I was convinced that the majority of the company’s portfolio consists of loans for individuals. However, it seems that we can approach the subject that is closer to me. Business. Right?

Yes. To make it easier for you to understand, Microinvest has about 4,000 business clients and around 36,000 debtors whose income consists mainly of salaries. At the same time, it is obvious that business loans cover the majority of the portfolio – about 70%.

So, to conclude the introductory part, what is the source of financing for the lending activity? Judging by the amount of the loan portfolio, of course it’s not about a group of individuals?

Microinvest has a successful cooperation with over 13 different foreign creditors. Many of them provide funding for entrepreneurship development, including FMO, DGGF, the Dutch government, DFC (WBC) US government and many other specialized development funds: Blue Orchard, DWM, Triple Jump, Symbiotics…

I think my next question will be a suitable one, although some businessmen may not like it. Don’t you get the impression that some entrepreneurs have a childish opinion that banks and lending organizations should give up payments on loans and interest during the emergency period? Or, at least, reschedule them, reduce interest rates, and generally be “understanding.” At the same time, the state does not plan to provide aid to banks, especially to credit organizations…

As much as a manager of a lending organization can afford it, I am on the side of business. The crisis is an unexpected blow for everyone. Of course, we have gone through some crises in the past, but this is the first time when companies have had to close for an indefinite period./p>

Therefore, the first thing we did was to amortize to some extent what is happening to our debtors. We canceled the penalty for the entire loan portfolio from March 17 to the end of May.

In my opinion, it is a balanced decision. There are examples on the market of canceling the repayment of loan installments, but I believe that canceling the penalty is enough to avoid further companies’ temptations to defer payments. In my opinion, if a company has money in times of crisis, it makes no sense to accumulate debt for later. And for those who are in a difficult situation, canceling the penalty is enough help. What are the company’s plans for restructuring?

Our loan officers and call center work with each client individually. If a customer has the possibility to pay the debt, we recommend doing it. As we said, accumulating debt doesn’t make sense. We decided not to complicate the situation and drew up a single “package” of restructuring measures. I will not go into details now, but its goal is to return each client debt to the current amount in a maximum of 9 months.

Dumitru, I understand that in the present conditions it is not the case to make forecasts. But still, I want to understand what we can expect in this situation. What is your opinion? Especially considering that you have 4,000 business clients. The company must plan the steps to be taken…

It’s more about strategy than forecast. The situation with the agricultural sector is the clearest. The credit cycle related to it is quite specific. Under normal circumstances, agricultural enterprises do not make payments for up to 9 months. In addition, I believe that in the current crisis, the food sector will be affected to a lesser extent, especially the part focused on the internal market.

As for other sectors, the most affected ones, it is time to prove that our organization is indeed a “trusted partner”. For example, restaurants … Now, they will need money to “restart”, because they have lost practically all the stocks of current assets due to quarantine. In addition, I do not think that a single tranche of credit will be enough, it may need two or more. But what I want to say … My team and I joined Microinvest in 2015, it was a difficult period for the company, and we focused on crisis management. We did it. I am convinced that the ability to “survive” is part of Moldovan business DNA.

Do you have enough reserve to take on the role of shock dumper for the real sector, at least for the company’s clients?

Currently, Microinvest has accumulated reserves to cover risks, also do not forget that our creditors are practically institutional. The finances they offer are not only the money of companies, but the money of governments and their mission is to support entrepreneurship, including in Moldova. Thus, from my point of view, the prospects for 2020 are obviously not optimistic, but we should certainly not panic. I think we can handle it. And businesses as well.

Pavel Zingan

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