Ionel Blănculescu: The crisis will hit hard the real economy
After the crisis of the houses of savings in '89 in the U.S., a structure for the recovery of claims was created. The state has allocated 400 billion dollars at that time. After the bankruptcy of Credit Lyonese, the French did the same. In Romania, after the bankruptcy of Bancorex and the Agricultural Bank, the French and American models served for the creation of the AVAB.
The mechanism for the recovery of the non-performing claims and assets sets its wheels in motion in order to localize and cauterize the crises, no matter their size. The specialists in the management of crises are wanted everywhere these days.
Dan Constantin: Mr. Blanculescu, you are known for the Romanian economists as a specialist in the reorganization of the companies with great financial difficulties, after a laborious activity as the director, general director and president of the AVAB, the former Authority for the Capitalization of the Banking Assets. How do you comment on the international financial crisis from this perspective?
Ionel Blănculescu: Indeed, I have managed for 4 years a huge portfolio of companies, more than 4000, very representative for the Romanian economy, that were in financial difficulties, with debts of more than 4 billion dollars. I saved over 100 companies in industry and agriculture with the help of a corporate restructuring, which is for me a great professional satisfaction to say at least.
With respect to your question, I would rather not talk about the financial crisis itself, since its elements are already known, but about its consequences.
As it was foreseen, in a very short period of time, the financial crisis has transferred into the real economy, which includes the Romanian economy. We are still at the beginning of the problems caused by it, which is the beginning of the damage of the economic activity, while the most visible effects will probably be evident in the coming months or even years.
• What is there to do in this kind of circumstances?
In any difficult economic period, the strong companies with competitive management survive, separating themselves from the empirical areas, which go bankrupt most of the times. The companies that are affected by the economic crisis are obliged to restructure, by adapting to new realities. In fact, there is some kind of selection (not necessarily natural), which is rather imposed for the companies in the business.
• The Company “FINANCIAL CONSULTING AND INVESTIGATIONS” has recently created a structure that specializes in corporate restructuring. Explain to us what this is about.
The company that I run is a company specialized in litigations, and we successfully managed over 1.5 billion euros - the value of the litigations that the company investigates. We have recently created a structure specialized in corporative restructuring, which is to “save the companies with problems and to reorganize the businesses with great financial difficulties”. This means that for every company with a financial situation that starts to go down we apply a certain algorithm similar to the one applied for a sick person that goes to see a doctor. Therefore, we give a financial-economical and legal diagnose, a SWOT analysis, which shows, based on the existing symptoms, the cause of the financial difficulties. Once given the diagnose, a treatment is prescribed, with solutions designed to improve the situation the company. The company is restructured and all those cost centers and sides of the company producing losses are taken out, while the profit centers are isolated, so that they can not be influenced by the lack in performance.
A smaller company can result from this, but it will be clean, strong and appropriate for the new realities. Without this treatment, the company goes into economical metastasis, so to say.
If the situation requires it and this happens quite often, we also do transfusions, namely offer the necessary funding for continuing the work.
The requirement of the financier is that the restructuring had taken place, so that the money would not enter into a “black hole”, and we represent the guarantee that the treatment has a beneficial effect to the business. We complete the complex operation by post-restructuring assessing, to ensure that the company is on track and that the treatment prescribed and implemented has reached the target. In fact, we also created a specialized website, www.dificultatifinanciare.ro, where companies can access the services of this structure, where personalities of the Romanian economy give answers and solutions.
• Do you consider that the firms in Romania will face the effects of the global financial crisis?
This happens already. We are contacted by approximately 3 companies every day. These are companies with serious financial problems that look for help. I think that the Romanian companies will feel the effects of the financial crisis in the real economy after approximately 5 months, 2009 will be a very difficult year in this regard. We are ready to fight this pest, and we are ready to guarantee the saving of all the companies that will come to us.