The dream of the stockbrokers that wanted to see the largest bank in Romania, BCR, listed on the Bucharest Stock Exchange was shattered by Andreas Treichl, chief executive officer of Erste, the bank’s majority shareholder, at the end of last week. Treichl said he would do everything in his power to prevent the floatation of the bank and would be very angry if that happened.
“To me this is a closed topic. It is my clear wish to convince everybody who is involved that a listing of BCR is not necessary,” Treichl told a news conference in Vienna.
The statements of Erste’s CEO took some of the regional investment funds (SIF) managers by surprise, as they still hoped to see the bank on the Bucharest Stock Exchange.
“I was surprised by Mr. Treichl’s statements. I think he partly speaks to the Erste shareholders to calm them down and partly to us,” said Costel Ceocea, chairman of SIF Moldova (SIF2.RO). “I see these statements as a signal to start negotiations quickly especially because they have publicly expressed interest in buying 100% in BCR. We at the SIFs have not had time to meet and set a common position towards the stakes in BCR yet.”
SIF Moldova’s head says BCR’s first half results are not encouraging and despite the difficult market, there are notable differences compared with the results of other similarly large banks.
Ceocea said BCR’s listing remained the first option of the SIF management but he was also considering other options.
He added he had repeatedly asked Erste officials to have an independent assessment of the potential BCR floatation done, which would be a quite convincing opinion, but nothing happened until now.
That is even though Erste committed to start listing procedures for BCR until this October, after having been given more time by SIFs two years ago, when they agreed to postpone the floatation because of the crisis. Erste had undertaken in the privatization contract to list BCR in no more than three years from takeover, that is 2009.
Stock exchange investors were quick to react to the Erste CEO’s statements, as they felt the failure to list BCR would cause losses to the tens of thousands of SIF shareholders.
The statements of Erste’s CEO came shortly after a number of SIF shareholders, which own 5% in each SIF, requested that a general meeting of shareholders be called and the SIFs boards of directors be given the power to demand BCR floatation.
The SIF shareholders had been worried that in the absence of a listing schedule for BCR and with the signals that had emerged lately about the majority shareholder of the bank not wanting to go ahead with the listing, one of the SIFs might sell its stake separately and the others might suffer as a result if they tried to sell their stakes because of the provisions in the privatization contract.
BCR’s articles of incorporation enable the five SIFs to block important decisions of the bank such as capital increases and indirectly force the listing of the bank because a majority of 75% of the capital is required to adopt major decisions. Were one of the SIFs to sell its stake in BCR, the other SIFs would lose this power and remain captive shareholders. Erste, on the other hand, would no longer be required to float BCR under the circumstances.
Brokers believe that in the absence of BCR’s listing, the SIFs will be able to at least pressure Erste management so that they could get as good a price as possible for their stakes in BCR. Each of the five SIFs owns 6% in BCR, which are their most important interests.
If taking into account the price offered by the Austrians to BCR shareholders to convert 6.5 BCR shares into one Erste share in 2006, and the current price of an Erste share, the SIF stakes should be worth about 5.2 billion lei (EUR1.2 billion).
(English version by Loredana Fratila-Cristescu)