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Financial Services Industry Insights

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Clauses leading to changes of costs in loan agreements: the market disruption clause; …

Clauses leading to changes of costs in loan agreements: the market disruption clause;
the mandatory costs clause; the increased costs clause.
“Tax gross-up” clauses under cross-border loan agreements – Romanian law specifics

Articles by Deloitte Tax and Reff & Associates correspondent law firm of Deloitte Romania

Published in Economy & Finance , Business
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  • 1. Financial Services Industry Insights In this issue: Banking - Clauses leading to changes of costs in loan agreements - “Tax gross-up” clauses under cross-border loan agreements Romanian law specifics Insurance - New AML/CFT regulation International and domestic recent FSI regulatory developments. Financial Services Industry, March 2009
  • 2. Clauses leading to changes of costs in loan agreements Introduction Types of clauses The fair concern of the borrowers in any The market disruption clause; finance transaction ‟ the costs ‟ becomes The mandatory costs clause; increasingly critical in current times when The increased costs clause. banks, facing significant increases of their funding Market disruption costs, are tempted to transfer such additional costs to the In certain credit agreements the banks have borrowers. the contractual right to increase the interest rates to align them to the market conditions. The material herein presents several types of In other cases, where the banks’ right to clauses of credit unilaterally change the interest rate is not agreements which may trigger additional or discretionary under the contract, the banks increased costs for the borrowers, without are protected through the clause known as however aiming to analyze the validity the “market disruption clause”. thereof. It is worth mentioning that such This type of clause is specific for financings clauses have been developed for structured on the cost ‟ plus basis (with the corporate loans and the applicability thereof interest rate based on EURIBOR/LIBOR) where for retail loans should be further investigated, the interest is computed as EURIBOR/LIBOR including from the perspective of the rate for a certain currency and time period, consumer protection legislation. plus the margin, i.e. the bank’s profit; also, any other additional costs related to the financing are transferred to the borrower. Financial Services Industry Insights
  • 3. The reasoning behind the use of this type of The second situation covered by the clause clause is allocation of risks: namely, a bank is protects the banks when differences appear assumed to fund itself from short term between EURIBOR/LIBOR and the actual deposits in the interbank market. The interest funding costs. paid for such deposits (EURIBOR/LIBOR) represents its funding costs and the “plus” is Until the 90’s, the market disruption clause the margin ‟ the bank’s profit from the covered only the case of absence of transaction. This is the context where the quotations. During that period, Japanese bank wishes to protect itself by transferring banks were granting loans based on LIBOR to the borrower the risks which may affect plus margin. As Japanese banks’ rating the profit rate corresponding to that decreased, their actual funding costs grew transaction. substantially and the LIBOR rate was no longer representative. In the absence of the The market disruption clause is standard in second case regulated by the market the finance documents for syndicated loans disruption clause, the Japanese banks did not issued by the Loan Market Association (LMA) have the possibility to transfer the additional and has also been adopted in the finance funding costs to the borrowers and ended up documents of many Romanian banks. The having to sell their credit portfolios, in certain clause becomes operative in two cases: when cases with significant losses. the quotations for EURIBOR/LIBOR are not available or when the financing costs for the The market disruption clause in the context lender (or, in case of syndicated loans, for a of the global financial crisis certain percentage of the banks in the syndicate) are increased, case where it allows Currently, in the context of turbulences on the lender to increase the interest rate when the international financial markets and the its financing costs are in excess of liquidity crisis, banks, facing real increases of EURIBOR/LIBOR. The interest increased in their funding costs, turn to this clause. In the such manner shall reflect and cover the UK, the British Bankers’ Association (BBA), in lender’s actual costs of funds. response to recent reports according to which more and more banks turn to the History market disruption clause, issued a press release stating that the application of such Historically, the clause appeared due to the clause should be a last resort and only after fact that the banks often grant loans in certain measures have been undertaken. BBA foreign currencies ‟ without having domestic considers that this clause should only operate financing resources for such currencies ‟ and when the banks face real difficulties in at rates which are entirely linked to the obtaining funds or if the interests payable for functioning of the interbank market. The the interbank deposits are substantially clause appeared in the 60’s ‟ 70’s in the higher than EURIBOR/LIBOR. context of the concerns regarding the potential freezing of the financings in US dollars in the European markets ‟ hence the first situation regulated by the clause: the absence of quotations.
  • 4. Nevertheless, according to BBA, Increased costs EURIBOR/LIBOR rates should reflect, even in current conditions, the average funding costs The increased costs clause comes to protect for the panel banks. Renouncing to the the bank against the risk of introducing or transparent system of calculating interest amending legal or regulatory provisions (or of rates based on these indicators and changes in the application or interpretation determining interest solely based on the thereof) which may affect the bank’s profit in individual funding costs of each bank, would a specific transaction or which are capable of lead interest calculation to become difficult triggering certain additional costs for the and opaque. In addition, this would deprive bank. the borrower of the possibility to challenge such computations or to request its lender to Borrower’s remedies document such additional costs (if such rights have not been contractually granted to the The LMA type agreements or those inspired borrower). by the LMA create, however, a certain level According to the Association of Corporate of protection for the borrowers. For example, Treasures (ACT), it is essential that the in case a market disruption event appears, reasons why the indicators do not reflect the the LMA standard agreement provides the market conditions are investigated prior the possibility, upon request of any of the banks using this as a reason for abandoning parties, to enter into negotiations (usually for the standard method of computing the a limited period of time) for determining an interest based on EURIBOR/LIBOR. alternative method for calculating interest. Furthermre, in such a case, as well as in other Other clauses imposing additional costs situations where the bank intends to apply to the borrower in a loan agreement increased costs, the borrower is allowed to early repay the debt (without prepayment The market disruption clause is however not costs). the only clause in a loan agreement able to trigger additional costs for the borrowers. In However, the additional costs imposed addition to the bank’s commissions, the through the above mentioned clauses are transaction costs or early repayment fees, the owed by the borrower until repayment takes LMA - type agreements contain clauses that place. In addition, in the case (very likely) transfer to the borrower the regulatory costs: where the reimbursement takes place capital adequacy or costs of establishing the through refinancing, this triggers additional minimum mandatory reserves by the banks time and costs for the borrower and the („mandatory costs” and “increased costs” margin of the refinancing facility is likely to clauses). be higher than the one in the refinanced loan. Mandatory costs The mandatory costs clause covers the Author: transfer to the borrower of all existing regulatory costs, such as the costs related to Simina Mut - Senior Associate in establishing minimum mandatory reserves Reff & Associates SCA, the correspondent usually payable to the regulatory authorities. law firm of Deloitte Romania. Financial Services Industry Insights
  • 5. “Tax gross-up” clauses under cross- border loan agreements – Romanian law specifics It is a well known fact that any loan involves A cross-border loan agreement usually the disbursement of a sum by a lender (or a contains a clause which (in the absence of a number of lenders in case of syndicated loans withholding tax exemption applying) requires / club loans) to a borrower, with the the Romanian borrower to pay an additional obligation for the later to repay the borrowed amount so that the amount of interest paid amount (known as principal) plus an interest to the foreign lender effectively is the same (additional fees are usually also applicable). as if there was no withholding tax. Actually, On this basis the lenders all over the world under such “gross-up” clauses, the have developed standardized Romanian borrower undertakes to pay to the documentations for loans, assignments and foreign lender the equivalent of a before-tax participations. Additionally, a substantial amount of interest, in spite of the fact that, literature has been developed in this respect under the law, the foreign lender is the one (notably such doctrine is mostly availably liable for the tax. While cross-border loan internationally, while only very limited is agreements will usually include a “tax gross- available on Romanian law). up” clause, in local loan agreements (i.e., where both the lender and the borrower are While at an international level, such located in the same tax jurisdiction) such standardized documents have been clause is sometimes missing (i.e., as the developed and adapted so as to suit the lender does not see the purpose of such particularities of the various interconnected clause in the first instance). However, such implications (regulatory, accounting, tax, etc), omission may fire back in cases where local using them now in jurisdictions which loans are to be subsequently assigned to a historically did not pursue the same steps, foreign third party (e.g., a financial might be challenging both for the lenders institution located in a different tax and the borrowers. For instance, the jurisdiction). contractual regulation of some tax In cases where the loan agreement is silent obligations in the loan documentation might on this matter (i.e., no “gross-up” clause), pose significant issues mainly due to the fact then the application of withholding tax will that the realities of the international practices most probably occur, reducing thus the have taken ahead the local Romanian fiscal effective net amounts which a foreign framework. purchaser would prefer to receive from the borrower under the loan. In such cases, in For example, the “tax gross-up” clauses order to assess the correct tax regime, one provided in most of the international loan should look into the applicability of the relevant Convention for the avoidance of documentation is such a specific case where double taxation (if any), as well as into any the commercial reality is one step ahead to other tax laws, regulations and rulings issued the fiscal regulations which should offer the by the relevant tax authorities, as applicable. grounds for assessing the fiscal impact of the transaction.
  • 6. Whereas the “tax gross-up” clauses has been Going further, the foreign lender could claim essentially designed to ensure certainty of the the provisions of a convention for the lenders in respect of the amounts to be avoidance of double taxation received from the borrowers, in many (“Convention”), if such convention is jurisdictions the appropriate fiscal mechanism concluded between Romania and the country to implement it has been put in place. The of residence of that lender. Commonly, such tax issues raised currently at an international conventions reduce the withholding tax rate level by the use of the “tax gross-up clauses” with several percentages but there are are more sophisticated and focus more on conventions which also bring the taxpayers to keeping abreast the variances of the loan a nil withholding tax due on interest documentation and the interpretations rising payments. therein. “Tax gross-up” clauses – option 1 In Romania however, there is a strong need to first reach an Let us now take for example a simple type of understanding of this clause and the impact “tax gross-up” clause, whereby the loan is has: agreement concluded between a foreign „ first from a tax standpoint at the lender and a Romanian borrower, provides level of the lenders and of the borrowers, but only that if any withholding tax shall be also applicable to the payments due by the „ from an economic perspective, if borrower to the lender, such withholding tax such uncertainties would impair lending will be paid by the borrower. activities and potentially lead to a blockage. In these conditions, the Romanian borrower should gross the 100€ interest payable to the Lack of a “tax gross-up” clause foreign lender with such an amount that on Normally, for a 100€ interest revenue derived one hand, the tax authorities are not from Romania, a foreign lender would be deprived by an accurate amount of tax, and liable to have that income taxed in Romania on the other hand, the foreign lender at a withholding tax rate as provided for in receives all 100€ interest in one stage only. the applicable Convention (assuming one is As most of those involved in this type of in place and the conditions for its activities know already, the polemics around applicability are met) or the local rate This is the gross-up mechanism arise in respect of done via withholding to be performed by the the tax rate applicable when computing the Romanian borrower, which is liable in this tax. Specifically, the big question is: should respect towards Romanian authorities. you apply only the domestic tax rate or could Specifically, the borrower should withhold you claim the provisions of the Convention 16€ representing interest withholding tax for the avoidance of double taxation? due by the foreign lender (assuming a 16% rate applicable) and wire the money to the It is relevant to say that the Romanian tax Romanian tax authorities, while the laws state that the domestic tax provisions remaining 84€ would reach the foreign are applicable in case the “tax due by a non- lender’s pocket. resident is payable by the income payer”. Financial Services Industry Insights
  • 7. The rationale behind this provision is that Even more, the Fiscal Code is explicitly stating once the Romanian borrower chooses to bear that in case any of its provisions would the tax otherwise normally due by the contradict an international treaty to which foreign lender, the subject of taxation is Romania is a party, the respective treaty shall switched from a non-resident to a resident, prevail. therefore the grounds for claiming the provisions of a Convention no longer exist On the other hand, it is also relevant to since there is no “double taxation” involved mention a court precedent (i.e., Decision no. in the first place anyway. Under this 4111 from 22nd of November 2006 of the rationale, the Romanian borrower, instead of Romanian High Court of Justice) whereby, being a mere “collection vehicle” for the tax among others, the court supported the due by a non resident, becomes a regular interpretation of certain specific fiscal resident taxpayer for that tax, thus subject provisions under the local legislation in the only to the Romanian tax provisions while the sense that, given the existence of contractual foreign is discharged by its Romanian tax provision stipulating the Romanian payer as obligations. bearer of the burden of payment of any withholding tax, the double tax treaty Furthermore, the tax born by the Romanian existing in place between Romania and the borrower on behalf of the lender shall be creditor’s tax jurisdiction cannot be invoked, disallowed for deductibility for corporate and therefore local withholding tax should income tax purposes, incurring thus a cost. apply. While Romanian law is not a precedent based system, it is recommendable It has been argued that the above Romanian that the existence of relevant precedents (in tax law provisions and the consequent particular when resolved at the level of the rationale, may contradict constitutional High Court) be considered when interpreting provisions, specifically those that the arguable legal provisions. domestic legislative provisions cannot prevail over those included in international treaties Notwithstanding the above, in a case where concluded by the Romanian state with other the agreement includes such gross-up clause countries. However, the Romanian but the lender still wants to apply the Constitution provides for such prevalence of Convention, one should consider whether international treaties over local law only in this approach might not actually lead to an respect of international treaties concerning avoidance of tax rather than to the avoidance human rights and EU constitutive treaties or of a double taxation. Thus, while the foreign other EU mandatory legislation. In our lender has negotiated a clear neutral position opinion, a stronger argument challenging the with respect to the taxes due in Romania by applicability of the above mentioned tax law discharging its obligations towards the provisions comes from the Fiscal Code itself Romanian borrower, if it would receive from which, under the section dedicated to the the Romanian borrower the proof that tax application of the Fiscal Code versus existing has been withheld and paid in Romania for Conventions, provides for the applicability of the respective interest, the foreign lender a Convention whenever it is in place and the could theoretically benefit of a fiscal credit in conditions for its applicability are met. its own tax jurisdiction for a tax that was actually born by somebody else. Although this may seem as an extreme case (and could be viewed as a matter of bad faith), it might not be very easy for the tax authorities to identify such situations.
  • 8. “Tax gross-up” clauses – option 2 Conclusion Another drafting option is to provide in the The most often used forms of contractual loan agreement that if any withholding tax drafting for “gross ‟ up” clauses have been applies, then the amounts payable by the outlined above. Importantly, variations to borrower shall be increased with such these may and sometimes are strongly amount necessary, so that the net amount to recommended to be considered. There are be paid to the lender (i.e., upon applying the also other matters of relevance in relation to withholding tax) be the same as if no “gross-up” clauses (e.g., applicability of such withholding tax would have applied in the clauses in case of multi-lender structures, first instance. Under this option, depending differentiation between original lenders and subsequent lenders, duties of the parties in significantly also on the actual wording used providing documents needed for invoking in the loan agreement, one could argue that double tax treaties, etc.), which are the borrower may be seen as paying a addressed on a case by case basis when variable interest rate rather than merely drafting the loan documentation and which paying the withholding tax on behalf of the may trigger additional tax implications. lender. The polemics around the tax rate applicable If, again ‟ depending on the actual wording under a “gross-up” mechanism are still in the agreement, such qualification would strong and the reality is that, in our view, the correctly interpret the will of the parties, such problem of the gross-up mechanism has not variable interest should be evidenced as such been approached by taking into account all in the books of the borrower, and in fact, the factors surrounding the issue, as also in those of the lender. But under a presented above. It appears that the cross-border transaction the means of the legislator has taken the easiest path to solve authorities to check the records of the its immediate problem (i.e., imposing and foreign lender may be limited and raise collecting a tax over the Romanian source cumbersome issues including significant income) and left out the other factors, resources (time, money and personnel), and external to taxation, thus missing the big could be a matter that the authorities may picture called the development of the further consider and regulate. Also, it is economy, under which taxation is only one of debatable, to say the least, whether such an the factors involved (a very important one approach would be convenient to the foreign though). lenders. The development of the financial sector This second manner of drafting the gross-up depends not only on an accurate banking clause seems to be superior to the first legislation, but also on other factors such as option1, yet it should be noted that given the taxation of financial operations. Foreign ultimate effect, which is quite similar with the lenders and Romanian borrowers are entitled one of the first option above (i.e., one way or to a sound fiscal environment which does not another the borrower bears the withholding impair them in conducting their operations, tax due by the lender), there is still a offering them certainty in respect of taxation significant risk that the Romanian fiscal as well as the proper fiscal mechanisms to authorities / courts see such clause as having cope with the tax requirements. the same purpose. 1 This is also in line with the standards recommended by the Loan Market Association (“LMA”) Financial Services Industry Insights
  • 9. Notably, the Romanian borrowers and the Optimal from the perspective of a fair tax foreign lenders have now the means to treatment but also from a wider economic interrogate the tax authorities directly and perspective, i.e., that of allowing the lending clarify their specific tax matters arising from activities to develop properly, without the “gross-up” clauses included in their loan hindrances and barriers “imposed” by the agreements by applying for an individual tax local tax framework. binding ruling. If the parties would take this path, the tax authorities would need to deal with this matters concretely and due to the Authors: multitudes of possible situations arising from the application of the various tax gross-up Raluca Cojocaru ‟ Manager in Deloitte Tax clauses, the legislator may need to adjust the tax frame work accordingly so that the Andrei Burz Pinzaru ‟ Senior Manager in optimal solution is found. Reff & Associates SCA, the correspondent law firm of Deloitte Romania.
  • 10. Insurance: new AML/CFT regulation The Insurance Supervision Commission (CSA) Insurance companies should apply three has recently undertaken a broad initiative to levels of customer due diligences (standard, overhaul the regulatory framework dealing simplified and enhanced), will need to with anti-money laundering and combating perform a risk assessment in relation to their the financing of terrorism (AML/CFT). The lines of business and will need to risk rate new regulation, Order no. 24/2008 amends their clients and monitor their activities. the law to both reflect the Third EU AML Directive and address the recommendations In practice, insurers must: of the Third Round AML/CFT Report on Romania1 of Moneyva2.  review their internal AML/CFT policies and procedures and amend them to The new norms are substantially different incorporate the new regulation; from the previous ones, introducing further  analyze their AML/CFT company risks; obligations both for private companies and  develop a new mechanism to determine, for the supervisory authority. It introduces verify and register the identity of clients new requirements including those relating to and real beneficiaries or adjust the politically exposed persons, beneficial owner existing one as appropriate; and a risk-based approach to the detection  monitor the activity of their clients in and prevention of money laundering and order to ensure the proper risk terrorist financing. classification. A. Companies’ obligations The new regulation contains several indicators in order to assist in identifying Insurance companies must draft policies, suspicious transactions. Nevertheless it procedures and appropriate mechanisms in should be borne in mind that the indicators terms of KYC, risk assessment and risk listed are only examples and should be management, internal control, reporting and supplemented by other guidance available records storage to prevent and stop their and relevant industry and company involvement in money laundering and experience. terrorist financing. The mechanisms should allow for the identification of suspicious transactions based on risk indicators, applying appropriate measures for different categories of customers, products, services, operations and transactions. 1 Adopted by the Moneyval Plenary in July 2008. 2 The Council of Europe Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures Financial Services Industry Insights
  • 11. B. Insurance Supervisory Commission’s Deadlines obligations The new regulation entered into force at the The new norms enhance and detail the role beginning of this year and sets up strict of CSA in the AML/CFT field. In this respect, deadlines for insurance companies, for: CSA shall:  adopting internal procedures;  supervise and control the companies  appointing a designated person to be operating in the insurance market, to responsible for implementation and ensure that they comply with the new compliance with laws and regulations in legal provision on identification, force; verification and registration of clients  notifying the CSA of the above. and transactions, reporting and record keeping; The regulatory obligations of insurance  verify the AML/CFT policies and/or companies carry sanctions for non- internal procedures of the insurance compliance. Obviously, these are in addition companies; to the reputational risk associated with  require amendments of the policies money laundering and terrorist financing. and/or internal procedures when found not reflect prudential measures stipulated in the new rules. Authors: Paula Lavric ‟ Manager, Forensic & Dispute Services Catalina Stroe ‟ Senior Consultant, Forensic & Dispute Services
  • 12. International and domestic recent FSI regulatory developments A. International B. Domestic I. Regulations/Decisions I. Regulations/Decisions 1. Commission Regulation no. 1261/2008 1. National Bank of Romania’s Order no. of 16 December 2008 amending 13/2008 for the approval of the Regulation no. 1126/2008 adopting accounting Regulations compliant with certain international accounting the European Directives, applicable to standards in accordance with Regulation credit institutions, non banking financial (EC) no. 1606/2002 of the European institutions and the deposit guaranty Parliament and of the Council as regards fond in the banking system. International Financial Reporting 2. National Bank of Romania’s Order no. Standards (IFRS) 14/2008 for the approval of the 2. Decision of the European Central Bank reporting forms comprising the of 17 November 2008 laying down the statistical information of accounting - framework for joint Eurosystem financial nature and the methodological procurement. norms regarding their drafting and 3. Decision of the European Parliament and utilization applicable to the Romanian of the Council of 19 November 2008 on branches of other EU credit institutions the mobilization of the European 3. National Bank of Romania’s Regulation Globalization Adjustment Fund in no. 1/2009 amending National Bank of accordance with point 28 of the Inter Romania’s Regulation no. 11/2007 on institutional Agreement of 17 May 2006 the authorization of Romanian credit between the European Parliament, the institutions and Romanian branches of Council and the Commission on non ‟ EU credit institutions. budgetary discipline and sound financial 4. National Bank of Romania’s Regulation management. no. 2/2009 amending National Bank of II. Proposed Regulations Romania’s Regulation no. 3/2007 on 1. Proposal for a Regulation of the limiting credit risk as regards loans for European Parliament and of the Council individuals. of November 12, 2008 regarding Credit 5. National Bank of Romania’s Norm no. Rating Agencies 1/2009 amending National Bank of 2. Opinion of the European Central Bank Romania’s Norm no. 6/2008 on of 18 November 2008 at the request of amending National Bank of Romania’s the Council of the European Union on a Norm no. 7/1994 on the trade proposal for a Directive of the European performed by credit institutions with Parliament and of the Council amending checks. Directive 94/19/EC on deposit- 6. National Bank of Romania’s Norm no. guarantee schemes as regards the 2/2009 amending National Bank of coverage level and the payout delay. Romania’s Norm no. 7/2008 amending 3. Proposal for a Decision of the European National Bank of Romania’s Norm no. Parliament and of the Council of January 6/1994 on the trade performed by credit 23, 2009, establishing a Community institutions with bills of exchange and programme to support specific activities promissory notes. in the field of financial services, financial II. Proposed Regulations reporting and auditing 1. National Bank of Romania’s Regulation regarding the internal administration of activity, the internal process of evaluation of capital adequacy to risks and the outsourcing of activities of the credit institutions. 2. Financial Services Industry Insights
  • 13. Reorganisation services for financial services industry Creditor services Crisis management and turnaround Our Reorganisation Services Independent financial review for creditors: a management high speed review of the critical factors When faced with a liquidity crisis, companies team is made up of facing the business at risk. This review is can get the support of our cash flow professionals with extensive designed to answer quickly the key questions management process designed to facilitate a creditor should have regarding the the stabilisation of the business. In addition, financial and project exposure, for example, the liquidity position, we are able to bring into the company short- management expertise related the value of its collateral, its options and the term Chief Restructuring Officers who will viability of the management’s plans to lead the turnaround process. These to distressed situations. Its address its problems. Equipped with this executives have a hands-on style of goal is to lead and co-ordinate review, the creditor is able to make informed management designed for recovery. decisions promptly and be able to support Non-performing loans transactions Deloitte’s services to the viable debtors. As Deloitte has established itself as the participants of distressed Distressed assets solution services definite market leader in advisory and due Advising the owners of distressed assets, the diligence capacities in NPL transactions, we situations. Whether the client creditors or potential investors in distressed have accumulated a significant amount of is a troubled company, bank assets on transactions by which the current knowledge and expertise in the area of NPLs. We have helped many of our clients to lender, shareholder or stakeholders can exit the exposure and reduce their significant individual or portfolio specialist distressed investors enter. The potential investor in the NPL exposures. We have also assisted many distressed investor is able to bring fresh NPL investors to build their portfolios in our troubled company, we will capital and expertise to the situation that region. Our ad hoc assistance ranges from bring the appropriate Deloitte may be what is needed to address the cause the identification of potential targets or portfolio. We have also assisted many NPL team of advisors lead by the of the crisis and allow value to be created. investors in building their portfolios in our We have extensive experience of this type of region (based on geography, industry, decisive leadership needed in transaction in this region and understand the specific collateral) for negotiations with special situations. needs of creditors, investors and sellers alike. various parties, such as banks and their As a result we are able to match debtors. requirements and facilitate successful transactions. Restructuring We are able to provide hands on support for companies undertaking financial restructuring under the pressure of a financial crisis. This support extends beyond designing Contact plans to their implementation and the Hein van Dam ‟ Financial Advisory Partner negotiation of terms with creditors and other tel: + 40 (21) 207 52 30 stakeholders affected by the restructuring e-mail: hvandam@deloittece.com plan.
  • 14. Financial Services Industry Contacts: George Mucibabici Chairman tel: + 40 (21) 207 52 55 e-mail: gmucibabici@deloittece.com Audit  Audit and review of individual and consolidated financial statements Santiago Pardo prepared in accordance with Romanian and International Financial Partner Reporting Standards (IFRS); tel: + 40 (21) 207 54 92  Assurance services related to regulatory reporting (e.g., CSA, CSSP) e-mail: sapardo@deloittece.com  Tailored work-shops based on specific requirements in the area of the IFRS;  Assistance with the implementation of the IFRS in financial institutions  Interpretation of certain troubled IFRS standards and its application in practice  Agreed upon procedures on verification of subscribed share capital for the purpose of registration  Stock exchange listings (IPOs);  Internal audit outsourcing and co-sourcing; internal audit quality assurance reviews. Enterprise Risk Services  Risk Management Solutions (market, credit, operational and liquidity Gary Bauer risk) Director  Loan Business Process Review (retail and corporate) tel: + 40 (21) 207 52 19  A&L Management and Credit Portfolio Analysis e-mail: gbauer@deloittece.com  Advice and assistance regarding AML/CFT and technology relating to AML/CFT  Fraud detection and prevention  Litigation Support and Dispute Consulting  Internal / external penetration testing, configuration reviews and process reviews focused on applications, network and OS infrastructure and DBMS in order to determine if any significant vulnerabilities exists.  IT attestation audits (e.g. internet banking attestation, Electronic Payment System attestation) Financial Advisory  Corporate Finance Lead Advisory on Sell or Buy-Side. On Buy-Side, Antonis Ioannides expertise in coordination of Financial, Tax, :Legal IT DD Partner  Transaction Services, Financial Due Diligence or Vendor Due-Diligence. tel: + 40 (21) 207 56 26 Significant FDD expertise in banking, insurance and leasing sectors. e-mail: anioannides@deloittece.com  Valuation and Financial Modelling  Debt Advisory Tax  Assistance on corporate income tax matters related to funding Rodica Segarceanu operations, transfer of receivables, debt write offs (fiscal treatment of Partner income and expenses, thin capitalization rules, withholding tax tel: + 40 (21) 207 52 31 exposures, etc) e-mail: rsegarceanu@deloittece.com  Corporate tax assessment and structure tax efficiently significant transactions, such as mergers and spin-offs, IPOs, etc.  Assistance during tax authorities’ inspections and assistance in obtaining individual binding rulings  VAT tailored solutions applicable to financial institutions with focus on streamlining the VAT deduction right on acquisitions as well as correct assessment of VAT treatment of financial services Financial Services Industry Insights
  • 15. Legal  Finance law: legal assistance on loan and security documentation, loan Andrei Burz-Pinzaru restructuring and non-performing loans, transfer of loan portfolios, title Senior Manager, Reff&Associates check on assets used as collateral correspondent law firm of Deloitte Romania  Regulatory and compliance assistance for banks and non-banking tel: + 40 (21) 207 52 05 financial institutions, insurance companies, securities firms, asset e-mail: aburzpinzaru@deloittece.com management companies  Securities law: legal assistance on listing/ de-listing procedures, public offerings, insider trading, price stabilization, share buy-backs, stock option plans  M & A assistance in financial services industry: due diligence and transaction support Consulting  Operational effectiveness: Enterprise Cost Reduction, Organizational Martin Stepanek redesign / review, Process reengineering, Benchmarking analysis, IT Manager system’s selection / development, Activity Based Costing. tel: + 40 (21) 207 53 60  Support for increasing sales and market entry: Strategy development, e-mail: mstepanek@deloittece.com Strategy development for distribution channels, Support for sales force network redesign aimed at professionalization and sales increase, Design and implementation of sales management system encompassing recruitment, training, talent management and development of the sales force, Developing compensation and motivation systems for sales force, Branches / sales outlets design, New (direct) sales channel’s organization design and development.  Support for bancassurance operations: Strategy for bancassurance, Support in choosing bancassurance model, Developing product portfolio, Operational excellence for bancassurance, Support in setting up new insurance companies, Designing new sales and customer service processes, IT support.  Support for CFO: Finance organisation design, Finance systems strategy, Target operating model, Budgeting and forecasting, Enhance business analysis, Accounting and reconciliation remediation, Centralization of accounting processes, Accelerating and improving financial close, Treasury and cash management. Actuarial & Insurance  Cash Flows projections and value based management (profit testing, Solutions business planning, Embedded Value calculations and reviews); Slawomir Latusek  Risks and Liabilities assessment (Risk and capital management, life and Consultant non-life provision valuations); tel: + 48 (22) 511 04 54  Actuarial audit support (review of life and non-life reserving e-mail: slatusek@deloittece.com methodologies);  Calculation of pensions and other benefits;  Actuarial trainings (IFRS 4, Prophet, Cross, Remetrica, CROS, Glean, ReMetrica, Dynamic Financial Analysis according to Market Consistent Embedded Value and Solvency II requirements);  Predictive modelling (with application in insurance, banking and Human Resources).
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