Non-bank financial institutions
Stock exchange
Trading on the Bucharest Stock Exchange (BSE) started in
1995. A year later, an over-the-counter market (RASDAQ) was launched, enabling
citizens to trade shares acquired through the mass privatisation programme.
There are two tiers of listed companies on the BSE. The first tier has more
strict reporting and accounting requirements and currently consists of 27
companies. The main BSE index is the BET (Bucharest Exchange Trading). It is a
capitalisation weighted index created to reflect the movement of the 10 biggest
and most liquid stocks traded on the first tier.
Following the early years of boom, stock values were badly
affected by the withdrawal of foreign capital after the turmoil on Asian and
Russia financial markets in 1998. The BSE composite index fell by nearly 50 per
cent and the RASDAQ composite index fell by 20 per cent. The BSE composite index
recovered by 32 per cent in 1999 and the RASDAQ index by 7 per cent.
In 2000, the market was characterised by a severe lack of
liquidity. The exchange had an average daily turnover of US$ 200,000 compared
with US$ 3 million during the boom of 1997, and around 1,500 to 2,000
transactions per day. The BSE has been trying to attract investors through
aggressive marketing and also by strengthening its regulatory environment.
It has ceased to deal with companies that fail to meet the
regulations and in 1999-2000 29 such companies were delisted. Analysts believe
that an acceleration of the country’s privatisation programme would serve to
reverse the decline of the BSE.
The Romanian National Securities Commission is the main
regulatory and supervisory body for the securities market. he commission
was established in October 1994 as an independent administrative authority,
under the control of Parliament. In 2000 the Commission concentrated on
strengthening its regulatory and supervisory capacity in order to meet the new
developments in the market. In August 2000, the Commission became the regulatory
and supervisory authority for the commodity exchanges.
Insurance
Despite economic hardship, the insurance market has been
steadily expanding over the last few years, with an increasing number of major
industry players developing their business in Romania. The market reached US$
150 million in 1995 and US$ 270 million in 1999. A 15-20 per cent development is
expected in 2001, with life insurance increasing the most. The market is
presently under transition, as the current dominance of state-owned insurers is
being rapidly eroded by foreign insurance companies. During 2000, through a
regional participation with TBI Holdings, the EBRD undertook a € 4.1 million
equity investment in Omniasig, a Romanian insurance company.
The most important actors are Asirom, Omniasig, Allianz-Tiriac and Astra
insurance companies, which together hold around 65 per cent of the market. The
biggest player in the non-life insurance market is Asirom, with revenues
deriving mainly from motor and third-party liability as well as transport and
property policies.
The largest foreign players already present in the market are
CGU (UK), Nationale Nederlanden (Netherlands), the life-insurance market leader,
Merkur (Austria), TBI Holding (Netherlands), Generali (Italy) and AIG (USA). The
market witnessed several new entries in 2000. German giant Allianz AG bought a
51 per cent stake in Asigurari Ion Tiriac, which ranks number three in the
sector. The UK’s Commercial Union and Austria’s Grawe also launched local
operations. Finally, in December 2000, Austrian-based Wiener Stadtische bought a
51 per cent stake in local insurance company Unita, thus becoming the third
Austrian insurer to be active on the local market. Unita product sales are being
conducted in cooperation with Bank Austria Creditanstalt.
In April 2000, the Romanian Parliament adopted a new
insurance law that largely brought legislation in line with the acquis. Through
the introduction of higher capital, a solvency margin and technical reserve
requirements, the law will promote consolidation of the Romanian insurance
industry. The law also establishes the new Insurance Supervision Commission, an
autonomous and self-financed body.
EBRD assistance to the SME sector
One of the most difficult barriers to the
development of a sound private sector in Romania is the low availability of
long-term finance and risk capital to SMEs. The EBRD has several projects that
target SMEs:
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Romanian Post-Privatisation Fund. This is an
€ 44 million venture capital fund, supported by € 10 million of technical
assistance from EU PHARE, to provide new equity capital and management
assistance to Romanian medium-sized private and privatised industrial
enterprises. The Fund usually invests between US$ 1 million and US$ 5 million
for a significant minority position.
In addition, the EBRD uses Romanian banks as
financial intermediaries to provide loans to SMEs. Some examples:
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Banca Transilvania, a Cluj Napoca based
private bank, signed a loan agreement with the EBRD in 1999 for US$ 5 million
which is used for lending to SMEs. The money is provided under the SME Finance
Facility established jointly by the EBRD and the European Union. Contributions
from the EU finance the provision of a performance fee and a technical
co-operation package.
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Banca Comerciala Romana signed a loan of US$
20 million in January 2001 to support SME sector development in Romania.
The EBRD also has an equity participation in
and has signed a bank-to-bank loan with the Romanian Development Bank owned by
Groupe Societe Generale (France). The bank offers medium to long-term finance
for investment projects principally in the private sector. The maximum loan size
is US$ 5 million and there is no minimum loan size.
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WQC 2003 
ISAQ 2005