SIF Transilvania (SIF3.RO) is in the lead with 7.03 million shareholders, followed by SIF Muntenia (SIF4.RO), SIF Banat-Crisana (SIF1.RO), SIF Moldova (SIF2.RO) and SIF Oltenia (SIF5.RO), each with over 5.8 million shareholders at the end of last year. Petrom (SNP.RO), the largest Romanian company, has 465,668 shareholders.
According to the Central Depository, the institution that keeps the records of shareholders, there were 9.188 million shareholders at the end of last year, most of whom were individual residents. In other words, one in two Romanians is currently a shareholder in a private company or in a company listed on the Bucharest Stock Exchange.
The over 9 million Romanians received the shares in the early ’90s as part of the Mass Privatization Program whereby the state privatized over 5,000 state-held companies by distributing a portion of the capital free of charge to all citizens who were 18 at a given date.
But most of them are passive shareholders, and even less than 1% of them have a stock exchange investment account that enables them to sell their shares received freely from the state or to buy other shares on the stock exchange, according to the Investors Compensation Fund. Even more worryingly, of the around 90,000 investors with stock exchange accounts, only 3,000 investors are involved in trading over the course of a month, according to stock exchange statistics.
A short history of the mass privatization program shows why in Romania, of the over EUR9 million capitalists only a few thousand make stock exchange investments.
In the early ’90s, through the Mass Privatization Program, the state distributed freely to its citizens 30% of the shares belonging to state-held trading companies. The privatization of state assets was done in bulk, with the only selection criterion being age, without financially educating people, or explaining to them what it means to be a shareholder, how they can sell or buy shares.
Poland, a former Eastern bloc country that kicked off the privatization and reconstruction of the capital market at the same time as Romania, educated the population financially, got ordinary citizens involved in the privatization process and currently has the strongest bourse in Central and Eastern Europe.
“I remember that in 1992 I received a coupon worth 25,000 old lei, but there were people in front of post offices selling coupons. Many of them didn’t even know what these coupons were and sold them for a pittance. On the other hand, there were also people who identified the opportunity, bought coupons and ended up controlling companies that were later listed on the stock exchange. They shouldn’t have handed out coupons to everybody,” said Neculai P., a 62 year-old pensioner and shareholder in stock exchange companies.
In the first stage of the privatization process, ownership certificates were distributed free of charge to all citizens who were 18 on December 31 1990, worth ROL25,000/certificate.
The people who got hold of their certificate, but did not turn it into shares in a company of their choice, received shares in the former Funds of Private Property (FPP), the current SIFs.
In the second stage of the mass privatization process, since a big share of the population had not submitted their coupons in order to get shares, recalculations were made and nominal certificates were issued free of charge, worth ROL975,000 per certificate for all citizens who were 18 on December 31 1995 and for those who had not turned their ownership certificates into shares in the first stage. In parallel, the privatized companies were listed on the Bucharest Stock Exchange and on Rasdaq.
“The mass privatization program laid the foundations of the local capital market, but one should have explained to the population what it means to be a shareholder,” said Razvan Pasol, president of Intercapital Invest brokerage.
Most Romanians submitted their certificates with the FPPs (the current SIFs) and with the former fuelling station chains PECO, Agromec (former state-owned agricultural enterprises) and drug producers Sicomed, Antibiotice. So SIFs have now come to have the most shareholders among the companies listed on the Bucharest Stock Exchange.
Over 5.5 million Romanians are now SIF shareholders, with SIF Transilvania having the most shareholders – 7.03 million.
On the other hand, tens of thousands of Romanians are shareholders in companies that went insolvent, such as CNM Petromin Constanta, Bere si Malt Robema, Mobila Alfa, each with a few thousand shareholders who probably don’t know anything about the state of the company for years.
(English version by Daniela Stoican)