Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 1 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

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 2 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 3 Leasing Legislation at the Cross Road of EU Directives and Countries' EU accession policies  Some legal framework examples:

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 4 Leasing Legislation at the Cross Road of EU Directives and Countries' EU accession policies  Some legal framework examples:

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 5 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 6 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 7 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 8 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 9 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 10 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 11 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 12 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 13 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 14 The Financial Companies Association – ALB Romania Financial Leasing Market in Romania H1 2011

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 15 Evolution of Non Performing Loans from Total Granted Credits Evolutia creditelor neperformante din total credite acordate

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 16 Growth rates / Rate de crestere European Financial Leasing Market / Piata de leasing financiar in Europa H vs. H Source: Leasurope

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 17 Financial Leasing Market Evolution (Biannual Growth Rates) in Romania Evolutia pietei de leasing financiar (cresteri semestriale) in Romania H H1 2011

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 18 Romanian Financial Leasing Market - Weight per Good Segment / Piata de Leasing Financiar in Romania - Ponderea segementelor in total finantari H H1 2011

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 19 Romanian Financial Leasing Market Structure by Type of Lessor/ Piata de leasing financiar din Romania dupa categoria societatilor de leasing H ÷ H1 2011

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 20 Romanian Financial Leasing Market Structure by Origin/ Piata de leasing financiar din Romania dupa originea bunului H ÷ H1 2011

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 21 Romanian Leasing Market Structure by Acquisition Type/ Piata de leasing din Romania dupa tipul achizitiei H ÷ H1 2011

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 22 Romanian Financial Leasing Market Structure by Customer Type/ Piata de leasing financiar din Romania dupa categoria utilizatorului H ÷ H1 2011

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 23 Romanian Financial Leasing Market Structure By Contract Duration/ Piata de Leasing Financiar din Romania dupa durata contractului H ÷ H1 2011

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 24 Romanian Leasing Market Equipment Financing/ Piata de leasing din Romania finantarea echipamentelor H Vs. H H H1 2011

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 25 Romanian Financial Leasing Market Vehicle Financing/ Piata de leasing financiar din Romania finantarea vehiculelor H ÷ H1 2011

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 26 Romanian Financial Leasing Market Real - Estate Financing/ Piata de leasing din Romania - finantarea sectorului imobiliar H ÷ H1 2011

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 27 Real Estate Financing By Duration of the Contract / Finantarea bunurilor imobiliare dupa durata contractului H ÷ H1 2011

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 28 Real-estate Financing by Customer Type/ Finantarea bunurilor imobiliare dupa categoria utilizatorului H ÷ H1 2011

Source/Sursa: ASOCIATIA SOCIETATILOR FINANCIARE – ALB ROMANIA 29 The Financial Companies Association – ALB Romania Thank you!