Editorial | CEE
While there is now a light at the end of the pandemic tunnel in CEE and SEE, the second quarter of 2021 again brought many changes and challenges in the region's finance sector. Sustainability is becoming an increasingly important factor, which can be seen in certain measures that we examine in this edition. While growth has returned and green energy financing (also under the flag of sustainability) drives the market in both Romania and Hungary, the financial sector also foresees consolidation in Slovenia and Hungary.
The implementation of the restructuring directive continues throughout the region, but we have instead focused in this edition on already ongoing trends (like banking regulatory changes in Croatia and Serbia or the digitalisation of the securities market in Austria), since we will soon dedicate a special edition to restructuring, which we expect will become a major market driver in the years after the pandemic subsides.
In this edition, the focus is on the changes and challenges that affect the financial sector daily. I believe you will find these brief reports illuminating and that they will encourage you to get in touch with us for more on any of these topics.
Regulators consider regulatory changes for non-bank financing of sustainable companies | Croatia
- The Council of the HANFA, Croatia's financial
services supervisory agency, recently discussed proposed regulatory
changes that should strongly encourage alternative
financing of the economy and prepare listed companies for new ESG
reporting.
The changes should lead to liberalisation of the regulatory environment primarily for AIFs (easier licencing and reporting, lower fees, etc.). The HANFA is also considering allowing certain AIFs to grant loans. The regulator's main concern is that the value of AIF assets in Croatia is only 1.1 % of Croatian GDP compared to an average of 48.4 % in other EU Member States.
In addition, the HANFA has recently prepared national guidelines for ESG reporting, which define deadlines and ways of publishing non-financial reports, while also providing further instructions on regulations and non-financial reporting standards.
Ozren Kobsa
New legislation on digital global certificates | Austria
- An amendment to the Austrian Securities Deposit Act
takes a step towards digitalising the Austrian securities
market by introducing digital global certificates for bonds and
investment certificates. Due to the amendment, securities issuers
will no longer be required to produce, sign, obtain
countersignatures of and deliver a physical global certificate in
paper form to the Austrian Central Securities Depositary (OeKB CSD
GmbH). A digital global certificate is created by an electronic
data record at OeKB CSD GmbH, which will be responsible for the
technical implementation of the digital global certificate, based
on the information electronically communicated by the issuer. The
shares in a digital global certificate will bear the same rights
and functions under securities law as the shares in a physical
global certificate.
Angelika Fischer | Viktoria Stark
Special Situations | Poland
- The Court of Justice of the EU (CJEU) recently ruled on
Polish foreign currency loans. Many Poles took out such
loans denominated in the Swiss franc in the 2000s. After the 2008
crisis, they struggled with instalment payments, as the value of
the Polish zloty tumbled. The CJEU said that the Polish courts
would need to decide how to deal with abusive contractual clauses.
In May, the Polish Supreme Court was to issue its landmark decision
on such contracts, e.g. whether to annul them, but the ruling was
(again) delayed and the court is now awaiting opinions from, among
others, the Polish Central Bank and the financial regulator. The
decision may impact Polish lenders and result in out-of-court
settlements with customers.
Paula Weronika Kapica
Green April | Austria
- On 21 April 2021, the European Commission published a
sustainable finance and reporting package as the next
steppingstone towards the European Green Deal. It is comprised of a
proposal for an EU Taxonomy Climate Delegated Act, which is set to
apply as of 1 January 2020 and sets out technical screening
criteria as to whether an economic activity in certain sectors such
as bioenergy, forestry, hydrogen and hydropower can be regarded as
contributing substantially to the environmental goals of climate
change mitigation and adaptation. The Commission also put forward a
proposal for a Corporate Sustainability Reporting Directive (CSRD)
that revises the Non-Financial Reporting Directive (Directive
2014/95/EU) and is set to apply as of January 2022. The CSRD aims
to extend both the scope of listed companies required to report
sustainability information and the scope of information to be
reported (inter alia a reporting company's impact on
global supply chains). Other proposals for delegated acts contained
in the package aim to embed sustainability considerations in (among
others) financial product design, suitability assessments of
investors and asset management. This legislative package is
expected to be supplemented in time with certain energy sectors and
environmental goals yet to be covered by the European Taxonomy. You
can read more about it in our legal insight.
Henri Bellando
Marketplace | Serbia
- The Serbian Financial Collateral Act: Love at second
sight? The adoption of the Financial Collateral Act
(FCA) in 2018 was widely regarded as a great
addition to the Serbian financial law infrastructure. Still, more
than two years later, the FCA's full potential has largely
remained untapped. The key reason lies in its narrow scope in terms
of covered counterparties. Although the FCA delivered adequate
protections for close-out netting in financial transactions among
eligible counterparties (i.e. mostly sovereign and financial sector
entities), it still does not protect close-out netting in
transactions that involve regular corporate entities. Perhaps the
time has come for the legislator in Serbia to consider suitable
updates to the FCA so that market participants can give it another
chance.
Petar Kojdic
Renewable energy projects: is a second wave coming to Romania? | Romania
- It is well-known that Romania must step up the
deployment of renewable projects to achieve its 30.7 %
target for 2030. Some 6 GW of new wind power and solar PV
capacities need to be installed over the next 10 years. Our new
publication "renew romania" is online. Read it to find
out what is going on in the renewable energy market and about
project financing renewables in Romania. To sum up, we believe the
"second wave" is already here. It will largely be up to
all stakeholders to shape this wave into one that will boost the
sector and benefit everyone. There is little sense in pointing in a
single direction. The regulator needs good ideas and support from
sponsors and financial backers, who in turn cannot work miracles
without the appropriate commitment and investments from sponsors,
and so on. It will take a joint effort and we are optimistic that
quite a few pathways have been identified and need to be pursued.
In the meantime, as our experience in 2020 and in Q1 2021 has
already shown, where there is a will there is a way. We will
continue to support our clients and market initiatives in shaping
this second wave into a success for as many stakeholders as
possible.
Matei Florea
Q1 2021 review - getting back on track? | Slovenia
- The developments in the first quarter of 2021
(as summarised by the Bank of Slovenia) can, if looked at through
somewhat rose-coloured glasses, be viewed as early symptoms of a
transition by the banking sector towards a post-pandemic period. On
the transactional side, activity seems to be picking up - although
sizeable deals are still few in number. On the corporate lending
side, the primary drivers behind the trend are the increase in
M&A/investment activity (particularly in the IT/newtech sector
and infrastructure) and an overall improvement of the economic
outlook (resulting in some large-scale refinancings). Alongside
this trend, the banking landscape itself is looking at an
interesting potential shift, with one of the largest players being
in the process of changing ownership. Likewise, shareholders of
bank stocks are keeping an eye on the Bank of Slovenia, which will
either enable a distribution of dividends for 2020 or decide to
prolong the current freeze (set to expire on 30 September 2021),
pushing pay-outs into 2022.
Vid Kobe
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