Landmarks in the Evolution of the Main Types of Banking Operations of Albina in Sibiu 1872-1946. II

Abstract

Abstract The 75 years history of Albina Bank reflects in its main characteristics that particularize it in the modern banking system the forms and crediting policies present in its statutes. The initial focus of the Albina Bank board was to activate a diverse palate of credit activities – in the first statute of the bank we can find no less than 15 types of loans. Few were actually accommodated, according to the possibilities of financing and also related to the social and economic background of the future debtors that came, the majority until 1918 from the rural areas. More so, the bank took into account the economic, financial and political context where the Romanian elite from Transylvania activated. Thus, in the first period of activity of the Albina bank its board will activate the most mobile types of crediting (credit of input and lending with public collaterals) wanting to increase the funding sources. Later on, after a period of stability with regard to its financing capacity the bank will activate the mortgages and credits with bills of exchange covered by mortgage more suitable for economic investments in the rural areas with the perspective to use the higher lending for larger scale investments to modernize the land properties and acquiring land properties. In the same time for the everyday needs of the small owners the bank will open the so-called peasant credits or credits on agricultural products. For the needs of merchants and craftsmen the bank will introduce the overdraft. Until 1914 the credit of input and the mortgages will predominate. The mortgages will be backed financially by the ability of the bank to issue land bills. Next in value we can find credits with bills of exchange covered by mortgage, followed by the overdraft rather unstable in earnings. The credits for peasants and the credits on agricultural products were dropped at the beginning of the 20th century. A special place had the buying of the bills of exchange that Albina has issued in the first two decades of its existence to support its own banking business. Later on, with the development of its own liquidities it started to offer credits and buy bills of exchange from a large number of Romanian banks and credit institutions this turning Albina into a major trader in bank securities intermediating buying and selling of bills of exchange between Romanian and Austro Hungarian banks until 1918, preserving this role even in the interwar period for some of the small and mid-size banks. The bank will also acquire shares and public effects to consolidate its financial capability. The negative consequences of World War 1 were reflected in the drop in the nominal and real value of the bank’s business but also the crediting policies by reevaluating the volume of the main crediting activities. Thus the value of the mortgages and the exchange credits has decreased and the overdrafts became dominant by 1924, maintaining first place in the activity of the bank even after. The major political changes after the unification and the economic changes brought in by inflation, conversion, and depreciation of the currency along with the financial practices of the Old Kingdom banking system will bring about new options in the crediting policy of the bank in the post-war period. First, the bank sought to diversify the crediting targets to expand the lending to companies and industrial enterprises. This opening towards the urban environment imposed faster trading of capital and the transformation of the credits. They became more mobile, the long-term credit being reduced gradually until its extinction. The overdraft and the credits with bills of exchange will be preferred and the credits with bills of exchange covered by mortgage will diminish until their disappearance from the accounts starting with 1934. The economic crisis between 1929 and 1933 will negatively impact the bank. The debts, especially those of the peasant clients, will be blocked. This situation will be partially resolved by the Conversion of Debt Law in April 1934 but has impacted greatly its financial capabilities. The law for the organization of banking commerce in June 1934 will help bank Albina to redefine its crediting policies towards more mobility but the rhythm of its progress will be slow until the Second World War. The accounts of the bank show a focus towards more mobility in crediting. There were two main directions in the bank activity. Of exchange credit and overdraft with titles, mortgages, and goods as collateral. Then there were the shares and titles portfolios, the debt conversions, the long-term lending (not significant and registered only until 1940), and the real estate portfolio. Concluding we note that the crediting mode of Albina was structured over time, based not just on the financial resources, intentions, and bank policies but was influenced by the changes in legislation that organized the everyday functioning of the financial and banking business, and overall they were influenced by the economic and geopolitical context.