Prka: 2011. more loans to companies, less to the state

Loans to small and medium-sized enterprises will grow at double-digit rates next year. Lending to the state will decrease and the issuance of loans to companies will increase, as many have exhausted all financial reserves – stated Božo Prka, CEO of PBZ, at a meeting of bankers and entrepreneurs.

HUP gathered them in one place to encourage cooperation between entrepreneurs and banks on the path to economic recovery. Štoviše, PBZ Management Board member Darko Drozdek claims that small and medium-sized enterprises can expect the highest growth rates of loans ever next year, at least as far as this bank is concerned. Reflecting on the eternal problem of entrepreneurs – the availability and possibility of quick loan approval – Drozdek says it is difficult to be expedient and thorough at the same time, as each bank manager has 300 to 400 entrepreneurs in their ‘portfolio’ with around 70,000 clients in that category. 

He notes that the problem is understandable, as disputed bank receivables have increased by more than 50 percent in two years, so banks are being cautious. However, it is also in the bank’s interest to help companies in financial difficulties. How? Primarily by refinancing existing obligations, financing a new production cycle, restructuring measures, and also by getting involved in the preparations for financing restructuring, as the bank, says Drozdek, does not like surprises and wants to be involved in problem resolution in a timely manner. Additionally, he recommends that small and medium-sized entrepreneurs focus more on EBRD funds, which plan to allocate around 300 million euros for them next year.

Prka adds that despite the fact that the state has pushed companies out of the credit market, the overall situation is not so bad, as the ratio of loans to companies and households, when including foreign debt of companies, is approximately half-half, with a slight tilt towards companies. Speaking about the macroeconomic situation in the country, Prka believes that the situation is still economically manageable and we do not need a third party (IMF) to tell us what we need to do.

The deficit of the state budget is lower than the EU 27 average (around 7 percent). Public debt, even if all shipbuilding guarantees were to be called in, will be around 44 percent, thus still far from the Maastricht criterion of 60 percent of GDP. A large part of external debt is held by companies and banks while the state’s share is only about 11 percent. Just from foreign exchange and bank reserves, a third of the external debt could be immediately repaid.

– We only lack better coordination between individual sectors. Two-thirds of the recession can be attributed to a lack of coordination between individual policies. Our problem is that in a crisis, each authority, monetary, fiscal, banks, companies, has created its own instruments. We need someone who will bring that cacophony, those four different languages, into one, understandable to all – Prka vividly conveys, adding that the outcry against banks, due to the almost overnight closure of the credit tap, should be softened, as Croatian banks are not responsible for the crisis, did not instigate it, and unlike global banks that wobbled in the crisis and whose debt-to-capital ratio fell to 1:50, ours remained at a level of 1:8. This stability has prevented a deeper decline, claims Prka, convinced that Croatia will surely find that ‘coordinator’. (Gordana Gelenčer)