ANALYSISLenders and cell phone networks are pushingmobile banking services in 2009, with the mar-ket having welcomed its first specialized player

See page 15

BUSINESS REVIEWROMANIA’S PREMIERE BUSINESS WEEKLY APRIL 6 - 12 , 2009 / VOLUME 14, NUMBER 12

www.business-review.ro

ANALYSISUtility company, bank and SIF shareholders are en-joying higher dividends this year, compensating fortheir losses on the Bucharest Stock Exchange

See pages 10-11

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Bjarne Virenfeldt, the Danish consultant contracted torestructure Tiriac Imobiliare to a six-month deadline, isfocusing on Romania for project management anddevelopment

See page 12

Bjarne Virenfeldt, the Danish consultant contracted torestructure Tiriac Imobiliare to a six-month deadline, isfocusing on Romania for project management anddevelopment

See page 12

NEWSRichard Moat has left the helm of Orange Ro-mania and the France Telecom Group as awhole, citing personal reasons

See page 4

DANE TRAINS BRAINON ROMANIA

DANE TRAINS BRAINON ROMANIA

PETROM TAKES OUT EUR 300 MLN UNSECURED LOAN FROM EBRD TO FUEL INVESTMENTS; SEE PAGE 5

BUSINESS REVIEW / April 6 - 12, 2009 3

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N E W S

BUSINESS REVIEW / April 6 - 12, 20094

BRIEFSPOSTA ROMANA TO DELIVERGENERAL PURPOSE PREPAIDPAYMENT CARDé Romanian postal service PostaRomana and Advanced PaymentSolutions Ltd (APS), a leadingEuropean provider of prepaid cards,have partnered to launch thecountry’s first-ever general purposeprepaid payment card. The card willbe offered initially to Posta Romanastaff ahead of the consumer launch insix Bucharest-based branches in thesecond quarter 2009, and will berolled out to all 7,000 branches indue course.

EIB TALKS TO NINE LOCALBANKS ABOUT SMEFINANCINGé European Investment Bank (EIB)has said it is in talks with eight ornine banks operating in Romania forgranting financing to SMEs, and saidit could sign contracts with six ofthem by May. Bank representativeshave announced they plan this yearto enlarge the already exitingfinancing program of EUR 500million for SMEs. The loans will begranted equally by the EIB and theintermediary bank in Romania. Thecost of these loans is estimated to belower than market rate, according toEIB representatives.

INSURER CLAL TO SELL LOCALCOMPANY BECAUSE OF CRISISé Israeli insurance company Clal,present in Romania since 2006, is intalks with an investment group to sellits Romanian subsidiary in the secondquarter of 2009, a move promptedby local results and the need tooptimize resources, according tocompany representatives. The firmsaid the local development of theinsurance company was a greenfieldinvestment requiring constant capitalinput from the group, and that due tothe general economic background itcould not be certain of recouping itsinvestment in the local subsidiary.

Richard Moat, CEO of OrangeRomania, has decided to leave thecompany for personal reasons. Untila new CEO is elected, Thierry Millet,the mobile network’s current com-mercial manager, will be interimCEO. Moat is leaving the companybefore the end of his mandate, whichwas extended in 2008 for another twoyears.

“Richard Moat has decided toleave Orange Romania and the Or-ange-France Telecom group. After aseries of international missions in Eu-rope and Asia, Richard will go backto his home country, Great Britain,”said representatives of the company.

Moat has been part of the Orangeteam for 17 years. Since taking on theposition of CEO of Orange Romaniain September 2004, he increased thecompany revenues from EUR 624million to EUR 1.31 billion in 2008,

and consolidated its position of mar-ket leader.

Over the coming period, Milletwill completely take over CEO du-ties.

“The commercial and manage-ment team built by Thierry Milletover his three years of activity at Or-ange Romania will ensure the conti-nuity of the business and will pursuethe company’s priorities over the nextperiod,” added company representa-tives.

Millet has been commercial man-ager of Orange Romania since Octo-ber 2005 and led the client service,marketing and sales departments. Hehas 20 years of experience at Orange-France Telecom and has worked inseveral top positions internationally.

Orange Romania is the largesttelecom player on the market with al-most 10.4 million customers. At theend of December 2008, it had rev-enues of EUR 1.31 billion, a 6.2 per-cent increase compared to the rev-enues it posted at the end of 2007.

Otilia Haraga

The European Bank for Recon-struction and Development (EBRD)will lend EUR 100 million to localbank BCR in order to boost small-business lending for companies withturnovers below EUR 50 million. TheBCR is also in discussions with otherinternational financial institutions overadditional ways to support its lendingto the real economy, particularly to theSME sector.

The EBRD credit line is dedicatedto financing companies with a maxi-mum of 249 employees, turnover ofup to EUR 50 million and balancesheet of maximum EUR 43 million.Individual sub-loans in the frameworkof this credit line will be for no morethat EUR 1.5 million.

“The EBRD has a long history ofworking with the BCR. This loan is animportant step in continuing lending tothe private SME sector in Romania.Also, it is part of our crisis response

and co-ordinated efforts with the otherIFIs to stimulate the Romanian econo-my in these exceptional global circum-stances,” said Varel Freeman, firstvice-president of the EBRD.

The bank will increase its invest-ments in the country by an additional

EUR 500 million to EUR 1 billionover the next two years as part of aninternational EUR 20 billion financialsupport package. Approximately halfof this sum will be dedicated to the fi-nancial sector, and the rest investedacross the broader economy, includingin the corporate, energy and energy ef-ficiency and national and municipalinfrastructure sectors.

As a direct reaction to the globalcrisis, the EBRD has announced a sig-nificant increase in its overall invest-ments in 2009 to EUR 7 billion. TheBCR transaction comes in the contextof the Joint International Financial In-stitutions (IFI) Action Plan, underwhich the EBRD joined forces withthe World Bank Group and the Euro-pean Investment Bank with the aim ofinvesting a total of EUR 24.5 billion inSMEs via the banking sectors in East-ern Europe over the next two years.

Staff

Forte Business Services, the for-mer subsidiary of Siemens IT Solu-tions and Services, has becomeSiemens’s eighth division throughan absorption procedure, in linewith the company’s global strategy.The “Forte – a Siemens company”brand is being replaced by theSiemens brand, according to a state-ment from the firm.

The new division will be man-aged by the former management ofForte, Mihai Gherman as divisionmanager and Bernd Spreter, com-mercial director for this division.

At the beginning of last year, theGerman group's Romanian sub-sidiary Siemens SRL announcedplans to absorb Cluj-Napoca-basedelectrical equipment firm Frosys,

after acquiring it in 2007. After thetakeover, the subscribed capital ofthe resulting company will be con-trolled by Siemens Aktienge-sellschaft Osterreich, with a stake of98.72 percent. Siemens estimates abusiness value of EUR 54 million in2007, while Frosys attained EUR5.8 million in the same year.

Magda Purice

Siemens Romania takes over Forte Business Services

Richard Moat also leaves France Telecom Group

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The lending targets companies with turnovers ofless than EUR 50 million

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BCR borrows EUR 100 mln from EBRD to support SME lending

Richard Moat leaves Orange Romania

An article in the last issue ofBusiness Review mis-stated ValeriuBinig's current position – he is thefinancial advisory services directorwith Deloitte in Romania.

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BUSINESS REVIEW / April 6 - 12, 2009 5

Petrom, one of the main oil andgas producers in South-East Europe,has taken out a corporate senior un-secured loan of up to EUR 300 mil-lion from the European Bank forReconstruction and Development(EBRD).

According to company officials,the EBRD financing will support aseries of projects that include pollu-tion clean-up, the replacement ofoutdated pipelines, health and safetymeasures and moves to increase en-ergy efficiency.

“The EBRD loan is crucial toour ability to push forward thegroup strategy of raising environ-mental standards and increasing ourenergy efficiency and competitive-ness,” said Mariana Gheorghe,Petrom’s CEO.

The EBRD is providing up toEUR 150 million of the overallcredit, with the remainder to be syn-dicated to a group of commercialbanks. It may include a parallel loanto be provided by Black Sea Tradeand Development Bank. The EUR

150 million loan from the EBRDmatures in seven years, while thesyndicated loan, the difference up toEUR 300 million, matures in five.

The loan from the EBRD is partof a larger financing programagreed in June last year. Under thisprogram, in October, 2008, Petromobtained a medium-term credit fa-cility of EUR 375 million, and ben-efits from the support of its majori-ty stakeholder, OMV, for financingand achieving the company’s devel-opment objectives. Company datashow that, from the moment of pri-vatization until the present, Petromhas invested some EUR 4 billion inmodernization and improving com-pany performance. Petrom has anannual refining capacity of 8 milliontons and holds around 550 fillingstations in Romania. Last year, itsturnover was EUR 4.5 billion, whileits EBITDA stood at EUR 969 mil-lion. OMV, the leading oil and gasgroup in Central Europe, holds a51.01 percent stake in Petrom.

Dana Ciuraru

Petrom takes out EUR 300 millionunsecured loan from the EBRD

The Romanian Central Bank (BNR)has decided to drop the minimum levelof mandatory reserves for foreign cur-rency passives with a residual expirationgreater than two years from 40 percentto zero. This is a component in the cal-culation of minimum mandatory re-serves (RMO), which was however keptat 18 percent for passives in local cur-rency, and 40 percent for foreign curren-cy, both with an expiration below twoyears. The decision will be applicablefrom May 24, when Romania could alsomake its first withdrawal, of some EUR5 billion, from its IMF loan. The loancould counter-balance the drop in re-serves triggered by the recent decision.

The move may allow banks to in-crease their liquidity and unfreeze lend-ing if they can attract long-term financ-ing, with a minimum two-year expira-tion. It could also prompt them to switchshort-term financing to the longer term.

Although players were also expect-ing a cut in the interest rate, the BNRkept it at 10 percent. Recently, the bankmade changes to the structure of provi-sions, allowing banks to deduct 25 per-cent of the value of guarantees for a loan

from the provisions set for it. Previously,they had to create provisions for loanswith more than 90 days’ delay in pay-ments but could not deduct the value ofthe guarantees from these provisions.

Bankers expected the move, as BNRgovernor Mugur Isarescu had previous-ly said the IMF loan agreement wouldallow the bank to gradually decrease themandatory reserves for foreign currency.In October last year, the BNR decided todecrease the level of RMO in local cur-rency from 20 to 18 percent, but, ac-cording to Isarescu, it turned out to be amistake, as banks changed the freedsums into euro and did not lend them.

The BNR and IMF recently receivedpledges from the shareholders of ninebanks active in Romania that they willcontinue lending in the country, supporttheir local subsidiaries and increase theircapital, if necessary. Erste Bank, Raif-feisen, Eurobank, National Bank ofGreece, UniCredit, Societe Generale,Alpha Bank Volksbank and Piraeussigned a letter to pledge support for thelocal economy, in view of the pendingEUR 20 billion loan from several IFIs.

Corina Saceanu

BNR changes structure of mandatory reservesto free up liquidity, maintains interest rate

N E W S

BUSINESS REVIEW / April 6 - 12, 20096

The Romanian subsidiary of Dutchbrewer Heineken has announced a 20percent increase in its turnover in 2008.From April, the firm will have a newCEO, Dutchman Jan Derck vanKarnebeek. The term of current presi-dent and CEO, Edwin Botterman, willfinish at the end of March. Bottermanwill next take up the post of generalmanager of Heineken’s operations inItaly.

The brewer holds 26 percent of thelocal market. It has over 1,300 employ-ees and has opened production units inRomania in five cities: Constanta,Miercurea Ciuc, Hateg, Targu Muresand Craiova. In total, the company hasinvested over EUR 165 million in theproduction units. Brands in theHeineken portfolio are Heineken,Zipfer, Gosser, Schlossgold, Silva,

Ciuc Premium, Golden Brau, Neu-markt, Bucegi, Gambrinus, Harghitaand Hategana. The firm’s Central andEastern European revenues grew last

year by 14 percent, to EUR 3.6 billion,according to the company. Recently,the Romanian Brewers’ Association,which comprises Heineken Romania,InBev Romania, Romaqua Group,United Romanian Breweries Bereprodand URSUS Breweries, announced atotal of EUR 200 million investmenthad been made by these companies lo-cally in 2008. Overall, these brewershave invested around EUR 950 millionon the local market.

For the last year, the association es-timated a 4.1 percent growth on thebeer market. “In 2008, the beer marketincreased and Romanian ranked amongthe top 10 European consumers. For2009, we estimate increasing beer salesbut at a lower pace,” said ShacharShaine, president of the association.

Magda Purice

Heineken Romania sees turnover rise 20 percent in 2008

The number of lawyers workingfor private law firms who wouldlike to become judges has been di-minishing due to the admission pro-cedure to the public system, the ex-am organized by the National Insti-tute of Magistrates (INM), says atop politician.

“Now admission is possible on-ly after an exam. In the past it usedto be done based on an interviewand an application file evaluation.Maybe this is too radical, becausethere are many experienced lawyers who would like to becomejudges but don't want to go throughexams, lawyers who feel they areexperienced enough to becomejudges,” Rodica Constantinovici,secretary of state with the Ministry of Justice, tells BusinessReview.

Previously, admission was easi-er in order to counterbalancelawyers' tendency to migrate to pri-vate firms, which payed better, sheexplains.

“The lack of a rigorous admis-sion system in the past was howev-er reflected in the quality of the jus-tice,” says Constantinovici.

The small number of judges maybe one reason for the length of trialsin many cases, which lies behind thepublic’s lack of trust in the Roman-ian justice system.

The high number of cases tosolve is an impediment for judges

too, says Constantinovici, who wasa judge herself in the 90s.

The new civil and penal codesand their procedures, which are de-bated in special commissions in theChamber of Deputies, aim to solvetwo of the main weaknesses of theRomanian justice, the length of cases and lack of consistence in le-gal practice, Constantinovici ex-plains.

“It happens in Romania that insimilar cases, the outcomes are dif-ferent, not only when decided bydifferent judges, but by the samejudge too,” the secretary of state ex-plains.

She expects the four debatedcodes, which have provoked discus-sion in the media recently, to beadopted by this summer, while theirenforcement should come one yearafter adoption in case of the penalcode, as the judges need a learningperiod.

“There have been several criti-cisms about these codes, mostly re-lated to patrimonial rights, and com-ments on changes in family rights,among others. It is normal to get areaction from the public. We needfeedback, and the reform is so pro-found that it would be unnatural notto have a reaction at all,” says Con-stantinovici, the ministry's represen-tative in the commission debatingthe civil codes.

Corina Saceanu

Length of trials and lack of consistency inpractice, main flaws of Romanian justice system

Several local law firms feature inthe top tier of the international titleLegal 500 for 2009. Nestor, NestorDiculescu Kingston Petersen (NND-KP) ranks in the top band in all eightcategories, Musat & Asociatii in five,and Tuca, Zbarcea & Asociatii three.Badea Clifford Chance, CMSCameron McKenna and Popovici,Nitu & Asociatii were each ranked inband one in two categories.

Badea Clifford Chance and CMSCameron McKenna were in the firstband of the banking, finance & capi-tal market section, while Musat &Asociatii, NNDKP and Tuca Zbarcea& Asociatii, made it for corporateand M&A. In dispute resolution, topranking went to NNDKP, TucaZbarcea & Asociatii and Zamfirescu,Racoti Predoiu. The energy and nat-ural resources segment is led byCMS Cameron McKenna, GideLoyrette Nouel, Musat & Asociatiiand NNDKP. The IT, telecom andmedia segment's top rating went toMusat & Asociatii, NNDKP, Popovi-ci, Nitu & Asociatii and TucaZbarcea & Asociatii. The privatiza-tion & PPP top spot is shared byMusat & Asociatii and NNDKP, andproject finance by NNDKP andPopovici, Nitu & Asociatii. The realestate and construction section ranksBandea Clifford Chance, Musat &Asociatii, NNDKP, Popovici, Nitu &Asociatii and Salans in the top band.

Corina Saceanu

The brewer holds 26 percent of the local market

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Local legal eagles flyhigh in int’l ranking

BRIEFSBURGER KING OPENS EIGHTHROMANIAN UNIT é Fast-food chain Burger King,operated by Atlantic RestaurantSystem, has opened its eighth outletin Romania in the Bucharest Mall, inthe Vitan area of the capital, thecompany has said. The locationcovers 110 sqm. At the end of 2008,the company announced it plannedto open fast food units outsideBucharest, one of the targeted citiesbeing Constanta.

OMV SELLS MOL STAKE TORUSSIAN COMPANYSURGUTNEFTEGASé Austrian oil and gas companyOMV has sold its 21.2 percent sharepackage in Hungarian oil companyMOL to Russian firm Surgutneftegasfor EUR 1.4 billion, according toOMV officials. OMV commentedthat the sale of its interest in MOLwas “a logical step” in the wake ofthe end of its efforts to take over theHungarian oil and gas producer inAugust last year, because of MOL’sresistance to being acquired andrestrictive takeover conditionsimposed by the European Union.

MEDICAL CENTER UNIREAPUTS EUR 400,000 INTONEW CLINICé Medical Center Unirea (CMU) hassaid that it has invested around EUR400,000 in opening a specializedclinic in Bucharest. The new clinic,which will provide labor services, islocated in the Iride-Pipera area. Thecompany expects to carry outbetween 15,000 and 25,000consultations and check-ups in the110-sqm clinic. CMU opened its firstclinic in the Iride area in 2005, anddecided to expand its localinvestments due to the increasingpotential from companies operatingin Iride business park.

AEGON ESTIMATES EUR 20MLN LOCAL INVESTMENT é Dutch insurer Aegon estimates ithas invested around EUR 20 millionon the local insurance market so far.Company representatives voiced theircommitment to investing further,depending on the evolution of thelocal insurance market. The insurerestimated a 0.37 percent access ratefor life insurance products locally,compared with 1.2 percent in Polandand 1.1 percent in Hungary.

WHO’SEVENTS, BUSINESS AND POLITICAL AGENDA NEWSADRIAN VASCU has recently joined

KPMG in Romaniaas a valuation serv-ices director. Hewill coordinate thefirm’s valuationdepartment at a na-

tional level, as well as headingup the Cluj office. Vascu hasmore than 14 years’ experiencein valuation services. At present,he is the president of ANEVAR(National Association of Roman-ian Valuers) and also a memberof the Board of TEGOVA (Euro-pean Group of Valuers' Associa-tion).

FLORIN BANATEANU has recentlyjoined KPMG in Romania as adirector in the EU and public sec-tor advisory department. Beforejoining KPMG, he worked as aproject director in the UN's glob-al development network, theUnited Nations Development Pro-gramme (UNDP). In his new rolehe will advise both private com-panies and state institutions onaccessing and administering fi-nancing. He will also give guid-ance on the formation of strategicpartnerships between the publicand private sectors.

REGIS MOUGEL, general manager ofAuchan hypermarkets in Roma-nia, has stepped down from thisposition. Previously, he was alsogeneral manager of Cora.Mougel said he would stay inRomania but would work in an-other field.

PATRICK ESPASA was appointed gen-eral manager of Auchan hyper-markets in Romania. He will re-place Regis Mougel who hasstepped down from the position.Espasa previously worked forAuchan Italy for ten years.

MIHAI ALEXE, 39, has joined DPD(Pegasus CourierSA) Romania assales representa-tive. He has wideexperience in salesin sectors such as

services, retail, real estate, cos-

metics and pharma. Mihai gradu-ated in Electronics and GravelTechnique in 1987 and is fluentin English.

CORIN CHIRIAC was appointed seniorstrategic planner at Senior Inter-active. He has seven years of ex-perience in communication and asolid background in brandingthat he acquired while workingfor Grapefruit. Previously, hewas strategy director in DDBBucharest and before that he wasPR officer at Iulius Group. Hegraduated from the GheorgheAsachi Technical Faculty in Iasi,the Faculty of Computers.

RADU GLONT was appointed accountdirector at SeniorInteractive wherehe will be responsi-ble for clients such as Renault,Heineken, Wrigley

and Alexandrion. He has workedfor five years at agencies such asTempo Advertising and DDBBucharest as account director.Glont is a graduate of the Acade-my of Economic Studies.

PATRICIA ARBANAS was appointed ac-count manager atSenior Interactive.Over the last threeyears, she hasworked for ScalaJWT and DDB

Bucharest. She graduated fromthe Marketing Faculty of theUniversity of Bucharest and iscurrently attending master’sclasses at the National School ofPolitical and AdministrativeStudies.

VERONICA CIACOVEANU was appointedjunior account manager at SeniorInteractive. Over the last twoyears she has worked for Lowe &Partners. She graduated from theFaculty of Law and is pursuingmaster’s studies at the NationalSchool of Political and Adminis-trative Studies, with a specializa-tion in Management and Busi-ness Communication.

Business Review welcomes information for Who’s News from readers.Feel free to contact us on 206 0680 (10 lines), by fax at 335 3474 or e-mail: otilia.haraga@bmg.ro

BUSINESS REVIEW / April 6 - 12, 2009 7

C A L E N D A R / W H O ’ S N E W S

APRIL 6é 09.00 – Romanian Chamber of Commerce and Industry organizes Ro-

manian-Jordanian Forum at its headquarters on the occasion of the visit

of King Abdullah II of Jordan.

é 09.30 – Bucharest Stock Exchange opens transaction session in the

presence of Jalil Tarif, CEO of the Amman Stock Exchange, at IBC

Modern building, the Millennium room.

APRIL 7é 18.30 – CEU Business School organizes master class on “The Global

Economic Crisis: Can Central and Eastern European Managers Cope?”

at JW Marriott Bucharest Grand Hotel in Galati conference room. The

master class will be led by Prof Yusaf Akbar, MBA Programs Director

at the school.

APRIL 8é Microsoft organizes online seminar “getVIRTUALnow”.

APRIL 9-11é Eurofinantari, a consultancy company in the development of projects

for European Financing, organizes workshop on “Drafting projects re-

garding HR development through POS DRU financing”.

Sorin Mindrutescu, countryleader of Oracle Romania, has beenelected the new president of theAmerican Chamber of Commerce inRomania (AmCham). Mindrutescuhas been country leader of Oraclesince February 2008 and was amember of the AmCham board dur-ing the previous mandate.

“We are aware that in the currenteconomic context, we have a chal-lenging mandate ahead of us, but at

the same time this makes AmChameven more valuable to its affiliates,”said the businessman.

Additionally, the Amchammembers elected a new board of di-rectors during their annual generalmeeting on March 26.

The new line-up consists of An-da Todor, vice-president of Salans;Cristian Colteanu, vice-president ofGE; Shahmir Khaliq, treasurer ofCitibank Europe plc; Bill Bowmandeputy senior partner in KPMG;Radu Enache, CEO of HP; ManuelaNestor, managing partner in NND-KP; Marius Persinariu, CEO of Xe-rox; Ionut Simion, tax partner atPricewaterhouseCoopers; CalinTatomir, general manager of Mi-crosoft Romania; and Mihai Tudor,general manager of IBM Romania,as board members.

AmCham Romania now hasmore than 300 members – Ameri-can, international and local busi-nesses, representing investmentsabove USD 10 billion.

Otilia Haraga

AmCham gets new board of directors

AmCham Romania has more than 300 membercompanies

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BUSINESS REVIEW / April 6 - 12, 20098

A N A L Y S I S

The recent International Monetary Fund call for public pension reform in Romania could trigger changes in a system which has come under pressure from a

worsening demographic outlook. Actual measures have yet to be decided, but the first steps have been made with the introduction of a social pension, a

frozen contribution ratio for mandatory private pensions and a mooted increase in the retirement age. Private pension funds say that, instead of patching up

the public system, the government should focus on strengthening the private component.

Romania considers publicpension system overhaul

By Corina Saceanu

Each Romanian employee whopays their social contribution taxcovers the monthly payments to justone pensioner nowadays. This hasput greater pressure on the system,as at the beginning of the 90s, thesame sum was met by three taxpay-ers. By 2050, four taxpayers willcover the payouts to 10 pensioners,a ratio of 0.4 to 1, according to esti-mates by the Romanian PensionFunds' Association (APAPR). Thelocal public pension system is suf-fering from a falling number of tax-payers, an rising number of pen-sioners and an unfavorable demo-graphic evolution, which calls forchange.

Reforming the Romanian statepension system was one of the re-quests made by the InternationalMonetary Fund, when it pledged aEUR 12.95 billion loan for thecountry. On the long term, the cur-

rent pay-as-you-go system, whichtakes contributions from taxpayersand distributes them immediately aspensions, may prove unsustainabledue to demographics.

At the beginning of the 90s, 8.2million taxpayers were funding thepayouts to 2.5 million pensioners inRomania. But 18 years later, just 4.9million taxpayers support the pen-sions of 4.7 million retirees. OfficialEuropean Union estimates that theRomanian population will fall by afurther 4.5 million by 2060 paint aneven bleaker picture. Half a centuryfrom now, Romania is likely to beone of the European countries com-ing under the highest demographicpressure.

On a shorter term, the WorldBank (WB) estimates a drop in pop-ulation of 2.3 million by 2025, andan increase in the ratio of Romani-ans over 65 years old. This meansan aging population will be moredependent on a decreasing numberof workers to cover their monthly

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An age old problem: A falling number of taxpayers support a growing number of pensioners

BUSINESS REVIEW / April 6 - 12, 2009 9

A N A L Y S I S

pensions. Romania is not alone –populations are aging across Euro-pean states. But the difference liesin the type of pension system eachcountry has adopted. In Western Eu-rope, retirement payments comelargely from private occupationalpensions, which are offered and ad-ministrated by employers. EasternEurope, on the other hand, relies onpay-as-you-go public systems, withmost of the countries having intro-duced private pension pillars to con-solidate those systems. Romania didso in 2007, and now allows manda-tory private schemes as well as op-tional private pensions.

CONSOLIDATION MEASURESMERELY PROLONG AGONY OFPUBLIC SYSTEM, SAY PRIVATEFUNDS

Increasing the retirement age, assuggested by the World Bank, fromthe current 58 for women and 63 formen, to more than 70 years old by2050 should consolidate the publicpension budget. In 2007, Romani-ans' life expectancy was 75 forwomen and 68 for men, a rise sincethe beginning of the 90s, according

to the National Institute of Statis-tics.

“This is not a reinvention of thewheel. On the contrary, other stateshave been trying surrogate solutionsfor years to prolong the agony of thepublic system pillar,” Crinu An-danut, president of the APAPR andalso head of Allianz Tiriac PrivatePension fund, tells Business Re-view.

Upping the retirement agewould allow for a re-balance in thepublic pension system, which islikely to see high imbalances in thefuture, according to the WB. Thedeficit in the pension system in Ro-mania will exceed five percent ofthe GDP in 2020, further increaseand then drop to 6.2 percent of theGDP in 2050, according to a WB re-port.

Other potential measures in-clude an increase in contributions tothe public system, plus limits onearly retirement and other benefits.“But these are only meant to patchup the system, not to offer lastingsolutions. The only lasting solutionis a strong Pillar II,” says Andanut.

In Romania, Pillar II of the pen-

sion system consists of a sum paidto the public system, which is redi-rected to privately administeredpensions funds.

Last year, two percent of totalsocial security contributions went toPillar II funds, and the Romaniangovernment has frozen the ratio forthis year, although it had initiallyagreed to increase the figure by 0.5percent each year, to a final 6 per-cent.

The move has caused discontentamong private pension administra-tion companies, which said it wouldcut up to EUR 80 million from thetotal amount which was supposed toenter the pension accounts of 4.6million contributors to Pillar II. Itwill also affect the private pensionadministrators on the Romanianmarket, companies which have in-vested EUR 500 million in thecountry so far.

The need to limit early retire-ment could be prompted by the in-creasing numbers of people leavingthe workforce early, numbers whichusually increase in tough economicperiods, becoming an alternative tounemployment.

While pension system reform isexpected, the government has de-cided to create a minimum guaran-teed pension of RON 300 from this

month, which will increase to RON350 in October this year. The meas-ure will cost EUR 200 million,which will come from the statebudget.

“We don't know whether the au-thorities will choose to limit earlyretirement, cease to link pensions tothe average salary and use only anannual index of the inflation rate, orincrease the retirement age – this isa public policy measure. But weknow for sure that a strong Pillar IIneeds to be built, to allow decentrevenues for today's contributorswhen they retire, as they currentlystand no chance of decent pensionsfrom the public system in 20 or 30years,” explains Crinu Andanut. Intwo or three decades, the publicpension will become symbolic –similar to state aid – and not suffi-cient to live on, he goes on.

The high contributions to thepublic system – 31 percent of thegross revenue – are not matched byhigh pensions, pundits believe. “Outof the 4.7 million pensioners in thepublic system, over three millionhave a pension below EUR 175 amonth. And this is the case after theaverage state pension has tripled inthe last five years due to electioncampaigns,” says Andanut.

corina_saceanu@bmg.ro

é The local private pensions market is the only one in the region to haveposted a positive yield last year, the rest of the markets having posted nega-tive results on the decline of financial markets, according to the APAPR. InRomania, private pension funds posted an average yield of 11 percent lastyear, compared to a loss of 22.5 percent in Hungary, 20.8 percent in Bul-garia and 14.2 percent in Poland.

é Private pension funds active in Romania started to collect money from con-tributors and make investments in May last year. At the end of Februarythis year, 58 percent of their assets were state titles, and 11 percent in bankdeposits.

Private pensions in numbers

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Crinu Andanut, president of APAPR and head of Allianz Tiriac Private Pension in Romania

BUSINESS REVIEW / April 6 - 12, 200910

A N A L Y S I S

The falls in share prices on the BSE of late have taken

dividend yields to their highest in recent years. Investors

who bet on utility companies like Transgaz and

Transelectrica, banks and financial investment companies

(SIFs) are reaping the rewards. Meanwhile, oil, pharma

and real estate firms, such as Petrom, Zentiva and

Biofarm, are not paying out any dividends for last year.

Utility, bank and SIFshareholders celebratedividend payouts

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IAFAX

Some of those who lost money on stock market transactions can at least enjoy higher dividends

By Dana Ciuraru

Dividends are not a popular top-ic these days on the stock exchange– at least for those investors who puttheir money into oil, pharmaceuticalor real estate companies, erstwhilesources of big profits.

“Dividends are down from pre-vious years, because of low netprofits and companies’ decision tokeep liquidities within firms,” Mar-ius Pandele, head of research at bro-kerage company Tradeville, toldBusiness Review.

Different factors affect a firm’sdecision whether to pay out divi-dends to shareholders or not – andsome have recently changed tack.Pandele says that on the one hand,some issuers on the Bucharest StockExchange (BSE) now prefer to allotdividends, having distributed freeshares in past years, which have losttheir shine for shareholders. BancaTransilvania is a case in point.

On the other hand, some compa-nies listed on the BSE have paid outdividends every year, but have nowdecided to keep the money within thecompany to help them through theeconomic crisis. Petrom and otherheavy industry companies have tak-en this option.

Others have been ploughing theprofits back in for some time. “In thepast three years, the company’s prof-it was reinvested and no dividendswere given,” said Cristina Suteu,head of the PR department at Dafora.

HIGHER YIELDS FOR 2008Capital market analysts say that

a lower absolute value of dividendsdoes not mean a decrease in yield aswell. On the contrary, the falls inshare prices have made dividendyields the highest in recent years.This side effect has brought aboutsignificant stock appreciation in thepast few weeks, with many in-vestors getting very excited aboutthe chance to achieve a gross profitof 10 to 15 percent of their invest-ments in little more than a month,especially at such a gloomy eco-nomic time.

Andreea Gheorghe, analysis de-partment manager at SSIF Intercap-ital Invest, told BR, “While for 2007about 20 listed companies approveddividends at an average of 3.45 per-cent, last year, the average dividend– based on the sums paid by 19companies – is around 7 percent, asthe capital market has undergone a

substantial increase over the pastthree months.”

She added: “The increase ismainly determined by the constantfalls in share prices compared to lastyear. Some companies have evenbeen registering a drop in the ab-solute value of gross dividends, forinstance the five financial invest-ment companies (SIFs). This year,dividends could reach as much as 16percent, as in the case of AlumilRom Industry and Alro Slatina, orabout 13 percent at Santierul NavalOrsova.”

UTILITIES FIRMS, BANKS ANDSIFS PAY OUT BIG...

The utilities sector is in a goodposition regarding dividends, withboth listed companies, Transelectri-ca and Transgaz, deciding to rewardshareholders this way. Transgaz hasa better dividend yield, of about 8percent taking into account theMarch 31 share price (RON 10.47per share – with the dividend pro-posed at a quotation of RON 115).“Transelectrica owes this to the eu-ro, dollar and Japanese yen loanscontracted, as the devaluation of thenational currency substantially cutlast year’s net profit. The dividendyield in this case is a bit over 3 per-cent, with a proposed gross divi-dend of only RON 0.3 per share,”said Pandele.

SIF investors are also set to reaprewards. Four out of the five SIFsintend to distribute dividends of be-tween 6.1 percent for SIF BanatCrisana and 10.5 percent at SIFTransilvania and SIF Moldova. InSIF Muntenia’s case, the share priceincreases recorded recently led to adividend yield of about 8.3 percent.But SIF Oltenia will not allot divi-dends. “The banking domain willalso bring investors good yields.Three of the four listed banks havedecided to pay dividends from lastyear’s profit. The dividend yieldwill be 5.2 percent for Erste Bank,5.9 percent for Banca Transilvaniaand 11.4 percent for BRD, at theshare price of March 31,” saidTradeville’s Pandele.

He added that surprise news hadcome from Alro Slatina: the compa-ny decided to allocate 84 percent oflast year’s net profit to granting div-idends. At the time of the announce-ment, the yield reached over 20 per-cent of the market share price. Sub-sequently, though, it has recorded aslight fall as a result of a share priceincrease.

BUSINESS REVIEW / April 6 - 12, 2009 11

A N A L Y S I S

Company / Symbol Net dividend Final quote Dividend 2008(*) April 1, 2009 payoutRON/share RON/share (%)

ALRO (ALR) 0.2415 1.5600 15.48Alumil (ALU) 0.2436 1.4900 16.35Aerostar (ARS) 0.0395 0.4800 8.23Antibiotice (ATB) 0.00672 0.4010 1.68BRD 0.72828 6.3000 11.56Comelf (CMF) 0.03157 2.6900 1.17Erste Group Bank (EBS) 0.546 12.8900 4.24Oil Terminal (OIL) 0.00076 0.1390 0.55SIF1 0.0252 0.5100 4.94SIF2 0.0378 0.4370 8.65SIF3 0.0252 0.2980 8.46Santierul Naval Orsova (SNO) 0.63 4.5200 13.94Transelectrica (TEL) 0.252 9.8000 2.57Transgaz (TGN) 8.7948 117.0000 7.52Uztel (UZT) 0.2436 7.5000 3.25Ves (VESY) 0.003 0.0752 3.99Banca Transilvania (TLV) 0.03963 0.8100 4.89Rompetrol Well Services (PTR) 0.02016 0.3330 6.05Titan (MPN) 0.0105 0.3750 2.80

BSE dividend payouts

SOU

RCES: SSIF IN

TERCA

PITAL IN

VEST

(*) Dividends either proposed or already approved by the general shareholders’ meeting

... BUT NO DIVIDENDS FROMOIL, PHARMACEUTICAL AND RE-AL ESTATE FIRMS

One sector which has disappoint-ed BSE investors is oil. The onlycompany that will provide a satisfac-tory dividend is Rompetrol WellServices, with a yield of about 7.5percent.

Petrom and Oil Terminal, whoseshareholders had become accus-tomed to rather large dividends inpast years, have chosen either tokeep all the profits at the company’sdisposal – as Petrom did – or give asymbolic dividend with a yield ofless than 1 percent – a move Oil Terminal was persuaded to make asa result of its very low profit lastyear.

“To ensure we have the neces-sary funds to finance this year’s in-vestment program – a reduced onecompared to 2008 – the Petrommanagement’s proposal is not togive dividends for last year,” saidMariana Gheorghe, Petrom’s CEO.

Rompetrol Refining meanwhiledoes not register on the dividendradar, having last year recorded evengreater losses than it did in the pre-vious one.

And MEFIN Sinaia shareholderswill not see any dividend this yeareither – something that is now parfor the course.

“MEFIN has not paid any divi-dends since its privatization in 2003.All of the company’s resources havebeen re-invested, in order to mod-ernize operations and support com-pany development. Management hasnot revised this policy and does notanticipate a revision in the near term.We hope that the country will offerthe necessary conditions to continuethe manufacturing of our core prod-ucts in Romania (and in Sinaia), inorder to avoid a possible move to amore investor-friendly country,”said George Barba, president of theadministration council at MEFIN.

Investors in pharmaceuticals andreal estate are also advised not tomake any plans for a dividend wind-fall.

“None of the three major phar-maceutical companies on the localmarket will give dividends this year.Biofarm finished with losses lastyear, because of financial invest-ments in SIFs, while Zentiva andAntibiotice have chosen to reinvesttheir profits,” said the Tradevillerepresentative.

Last year was a tough one for re-al estate businesses, and the firstthree months of this year have fol-lowed the same pattern.

As a result, dividends are off themenu.

The liquidity crisis is anotherreason that companies have decidedto hold onto their surplus cash, eventhough some of them made a profitlast year.

dana.ciuraru@bmg.ro

BUSINESS REVIEW / April 6 - 12, 200912

A N A L Y S I S

Late last year, Dane BJARNE VIRENFELDT started to work onrestructuring the real estate arm of Tiriac Holding, and is now a fewmonths away from seeing the first results. After 25 years of workingacross South East Asia and the Middle East, among other regions,Virenfeldt has started his own consultancy company and nowfocuses solely on Romania.

Tiriac's Danish consultantnears six-month deadline toturn real estate arm around

By Corina Saceanu

When he first came to Romania,four and a half years ago, BjarneVirenfeldt didn't necessarily plan togo into project development andmanagement in the capital or coun-trywide, although he had done so inother places around the world overthe previous 25 years. He first set upa production facility that producedwooden building parts in Targov-iste, a project that took two years.

After being challenged to do more,he decided to expand his activitiesand move his project managementand project development companyTecton International to Bucharestwhere it has started to manage ma-jor residential and commercial proj-ects all over Romania. These activ-ities culminated in a partnershipwith Tiriac Holding which he en-tered into late last year.

The 53-year-old Dane, whoholds a degree in engineering fromCopenhagen University, joined Tiri-

X

ac Imobiliare as a consultant to su-pervise the ongoing projects and re-structure the company.

“The restructuring is still some-thing we are working on very inten-sively,” he says, without going intotoo much detail. “It is an ongoingprocess. I know that I have beengiven about half a year to do it, so inthe next two or three months weshould see the result of it,” Viren-feldt tells Business Review in an ex-clusive interview.

He works with the local devel-oper through his project manage-ment company. “But from a person-al point of view, you could easilysee me as a Tiriac employee,” saysVirenfeldt from his office in theTiriac Holding headquarters over-looking Herastrau Lake.

DEVELOPERS LEARN NOT TOBURN MONEY THROUGH INEF-FICIENCY AND POOR QUALITY

“There are a lot of developerswho would prefer to run and hidenow; some of them probably don’thave the time or financial strengthto survive and go through a re-structuring process. Some of thosecompanies which have enoughfunds to keep going, in order to car-ry on and finish their projects willbe forced to consider restructuringtheir operations, also involving in-ternal procedures and protocols,”Virenfeldt says.

“Everyone in Romania rightnow is learning a lesson every day,and for some, it is a very expensiveone. People will have to be taughthow not to continue burning mon-ey on inefficiency and inadequatequality,” he goes on. “You will notsee a lot of projects that are sold justoff plan, you will see people in-specting the real thing before buy-ing, through which they will get atrue basis for comparison. […] Theywill start focusing on quality andlifestyle, sometimes prioritizingthese values over price.”

Some developers will have to re-alize that designing, building andselling a typical larger residentialproject in two to three years willprobably not happen for muchlonger. “I believe that due to qualitydemands, projects will take longerto develop and sell, and that willmake the project cycle longer,” theDanish consultant explains.

“There are not really manyapartments selling on the marketright now. We would definitely wantto see more apartments sold,” saysVirenfeldt, when asked about sales

of the two ongoing residential proj-ects.

Tiriac Imobiliare is currentlyworking on Rezidenz residentialproject, containing 480 residentialunits, which is close to completion.The market value of the project isEUR 70 million, according to thecompany. The developer is alsoworking on Stejarii, a 535-apart-ment project with an expected mar-ket value of EUR 230 million.

Prior to announcing a restructur-ing of the real estate business with-in the group, Tiriac Holding hadstated its plans to build mixed proj-ects in Timisoara and Brasov, andoverall investment plans of EUR900 million in the next couple ofyears.

“The projects are all very welldefined, but then, as always, thereare contractual challenges, an areawhere I have my strengths,” saysVirenfeldt about the residential proj-ects.

As an emerging market, Roma-nia is similar in many ways to whatthe consultant saw during his timein South East Asia and the MiddleEast.

“There, as here, there used to bea lot of easy money to be made inthe construction and project devel-opment business, and those whodecided to develop projects, whowere fast and determined, couldget into the market, perform and getout again. Some of them got out ofit very wealthy, often without everthinking about what quality of prod-uct they delivered,” says Virenfeldt.

Much of what has been built inRomania falls far short of buyers’expectations. “There is a lot of sub-standard quality around. […] Pre-dictably, when Romania’s economystabilizes there will be a lot of properties which won't be sold atall, or sold for much lower pricesthan expected,” explains the con-sultant.

The market asked for more thandevelopers were able to build, andthat was mirrored in the quality ofprojects. “In hindsight, Dubai wasprobably much worse than what youhave seen and still see here in Ro-mania, Asia too, although it was adifferent time,” he reflects.

Apart from the project with Tiri-ac Imobiliare, Virenfeldt's companyis working on several other develop-ments in Iasi, residential projectswhich total several hundred apart-ments and office and retail schemesin the city.

corina_saceanu@bmg.ro

APRIL 6 - 12, 2009 / VOLUME 14, NUMBER 12

BUSINESS REVIEW FORUM Manage your business environment !

Estates&ConstructionMARKET

Ocif delays start of Pipera project, Vivandoapartment prices down 10 percent

Real estate developer Ocif Group,which has partnered a Rothschild invest-ment fund for residential projects in Ro-mania, does not expect to start construc-tion works on the residential project it wasplanning to build in the Pipera area ofBucharest, although it already has almostall the necessary permits in place.

“The plot is suitable and has a PUZfor 1,700 units, it’s a large scale project.This kind of project should start in steps,with a couple of hundred units. My bestguest is that the project won’t start in2009,” Libby Weizman, managing direc-tor of the developer, tells Business Re-view. “Due to the challenging economicenvironment and the infrastructure issuewe will review commencing the projecton a quarter by quarter basis.”

Construction loans are not feasible for

projects in Pipera at this moment, becausebanks are now looking at other projects,Weizman adds. “Pipera enjoyed demandfrom foreign individuals, and this demandhas already been met. The next wavewhich will be coming to Pipera is localdemand, which will come after the infra-structure is addressed,” he explains.

The developer, which is six monthsaway from delivering the 110-unit Vivan-do project close to Unirii Square, has sofar sold 30 percent of the apartments inthis project, and none of the buyers usedmortgages.

Weizman, who took the helm of thecompany in February this year after theformer co-managers had resigned, is nowfocused on the sales and marketing cam-paign for the project. “I took the sales andmarketing in house the moment I came in.

I increased the project’s exposure; insteadof one agent with exclusivity, we nowwork with selected agents. I am looking atthe local demand, and there is local de-mand. I am looking at those individualswho have most of their money in cash,and there are more than 100 people in thiscategory,” Weizman explains.

The price per sqm of apartments inVivando is down by 10 percent, fromEUR 2,200 per sqm in the previous salessession, to EUR 2,000 per sqm with morerecent sales. “The previous management'sintention was to increase the sale pricewhile the construction advanced, which issomething that market conditions nolonger allow. There is also substantial val-ue that can be achieved through rents. Butfor me it is not an option to have a sub-stantial reduction in price,” says Weiz-man.

He plans to sell the remainder of theapartments in the project, but has notruled out renting the ones that remain un-sold. A combination of renting and buyingthe apartment afterwards, subtracting therent from the final price, is also a possi-bility.

Weizman says profit margins on resi-dential projects have not changed muchdue to a fall in construction prices. “Butthe turnover, the liquidity of a developerand the ability to sell are more importantnow than profit margins. […] You canwork on very small margins as long asyou have sound pre-sales. And you willnot survive with a huge envisaged marginif you don’t have pre-sales,” Weizman ex-plains. A small margin would be ten per-cent, while big margins are of around 30percent. This is still achievable on the Ro-manian market, he says.

Corina Saceanu

Libby Weizman, managing director of Ocif Group, predicts that the Pipera project will not start this year

CO

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IF GRO

UP

BUSINESS REVIEW / April 6 - 12, 200914

E S T A T E S & C O N S T R U C T I O N M A R K E T

German DIY chain Obi has re-cently opened two stores in Romania,in Pitesti and Arad, delivering around10,000 sqm each, the company says.The openings are part of the retailer’slocal strategy of opening at least fivemore units in Romania in 2009, in-cluding these two, after it opened upin Oradea and Bucharest in 2008.

Last year, the firm announced in-vestment plans of around EUR 50million for Romania, for opening 13units in cities with over 75,000 inhab-itants.

“Our company’s strategy in Ro-mania is to secure developmentspaces in retail parks, rather thanstarting a greenfield investment whichis more difficult,” said Dieter Mess-

ner, board member with the company. A regular Obi unit involves 8,000

to 12,000 sqm of sales space and em-ploys 120 personnel. The German op-erator owns 509 DIY stores in 11countries, of which 330 are in Ger-many. According to Messner, thecompany gets 50 percent of its salesfrom its home market.

On the back of its extension plans,the retailer seeks the market leaderposition on its targeted markets and a50 percent increase in business resultsin the coming years. Obi posted salesof EUR 5.8 billion in 2007 on Euro-pean markets. Its local competitorsare Praktiker, Bricostore, BauMax,Hornbach and Mr. Bricolage.

Magda Purice

German DIY retailer Obi expands to Pitesti and Arad

The Bucharest authorities have re-cently approved the zonal urban plan-ning for mixed use project DambovitaCenter in Bucharest, run by Israeli de-veloper Plaza Centers. An estimatedEUR 927 million will go into the proj-ect, which is set for completion in 2015.

The sum is higher than previous es-timates of around EUR 600 million inprevious reports. The project, a 34-levelbuilding of 722,000 sqm in built area,with 4,500 parking bays and 600,000sqm of commercial space, will be devel-oped on 10 hectares. Early stages, com-prising commercial space, offices, hotelsand residential, were set for completionin 2012 but were put back a year. Theland fell in value by 17 percent in 2008from 2007, to EUR 158.7 million.

In line with the market, Plaza Cen-ters, controlled by businessmanMordechay Zisser, saw a general depre-ciation of its local properties. Plaza Cen-ters reported pre-tax earnings of EUR 68million in 2008, compared with EUR227 million in 2007. The firm’s annualfinancial report attributes the significantdifference to the disposal of Plzen Plazain the Czech Republic, price adjust-ments following the sale of Arena Plazaand gains from financing activity. In thesame report, the total asset value in-creased from EUR 761 million in 2007to EUR 959 million in 2008, while thenet asset value dropped 35 percent toEUR 0.7 billion in 2008, from EUR 1.06billion in 2007.

Magda Purice

Dambovita Center gets town planningapproval, faces asset reduction

Atrium European Real Estate, thedeveloper of Bucharest commercialcomplex Militari Shopping Center, re-cently opened a commercial gallery ofsome 60 shops and 16,000 sqm of GLAfrom a total of 51,400 sqm, at an esti-mated cost of EUR 75 million. “Theproject developer intended to continuethis investment no matter the economicbackground,” said Bogdan Dancau,CFO of Atrium. Stephan Bonk, MD ofAtrium European Real Estate, said heplans to rethink projects in Arad andConstanta, to simplify them, thereby re-ducing total investment. Atrium’s land inthese two cities amounted to 13.5 mil-lion, said its financial report. Overall,

Atrium owns properties evaluated atEUR 1.7 billion and ongoing projects re-quiring EUR 727 million of investment.Last year, it reported a cash flow of EUR1.25 billion, along with loan debts ofEUR 1.5 billion and maturity after 2011.

Militari Shopping Center’s commer-cial area hosts anchors such as IT&Cfirm Media Galaxy, Domo and a Prak-tiker DIY unit. French retailer Auchan ispaying EUR 20 million to rent a 12,500-sqm hypermarket within the complex.

The fashion galleria brings newnames, such as C&A, Mladinska andImaginarium, plus first entries on theBucharest market like New Yorker.

Magda Purice

Militari Shopping Center opens, developer torethink Arad and Constanta projects

Office building Bucharest BusinessPark, owned by Austrian investmentfund CA Immo, was evaluated at EUR67.6 million in 2008, 17 percent downon 2007’s EUR 81.3 million. The rentyield reached 7.9 percent, and the fundmade EUR 5.3 million in rent, a compa-ny reports states. The firm’s financial re-sults included global gross revenue ofEUR 299 million in 2008, up from EUR144.57 million in 2007. Its EBITDA was

EUR 138 million in 2008, 46 percent ofgross revenues.

CA Immo is one of several invest-ment funds to have seen their Romanianportfolios fall in value, with Immoeastand Atrium similarly hit. The firm hadassets worth EUR 2.5 billion in 2008,with the acquisition of German real es-tate developer Vivico, which increasedthe group asset portfolio by 42 percent.

Magda Purice

CA Immo sees Bucharest Business Park marketvalue slump 17 percent

Green City Construct launched Green City Residence - agreen paradise with houses at the price of an apartment

On 26th March was officiallylaunched the residential project GREENCITY RESIDENCE right at the location, 1Decembrie village. There, the developerpresented the model house Neva, com-pletely furnished, the construction site(the baking of 68 houses are finished)and the center`s restaurant, wheretook place the reception.

The offer is: Neva House – P+1Structure, 158 sqm for only 84.000 eu-ro + 5% VAT.

Green City Project is developed in 1Decembrie village, an affordable areawhich will develop in the next fiveyears by a harbor, an airport and a Met-

ropolitan area. It rejoices a very goodlocation which offers facilities like apark of 40 hectares, a 40 hectares lake,private kindergarten and school, tradecenter, hotel, spa and wellness center,inside and outside swimming pool, 6tennis court, town equipment and sys-tems ( electricity, town water, drainage,TV cable, immovable telephony ). At theend of this year, more than 300 houseswill be ready to build and, until 2013,the whole project of 4000 houses willbe finished, including two office build-ings.

The exclusive agent of the project isthe real estate agency Eurometropola.

ADVERTO

RIAL

é The local branch of the Royal Institute of Chartered Surveyors (RICS) haselected 16 Romanian professionals as members of RICS and is looking atrunning interview sessions with 10 to 12 candidates later on this year, RICShas announced. Apart from professional experience, the other most importantfactor is an understanding of the RICS’s code of conduct and professionalethics. The 16 new RICS members are: Monica Barbu, previously with Col-liers, Radu Boitan of King Sturge, Gabriel Chimisliu of Colliers, DoinitaCostache of Cushman & Wakefield, Denis Donoiu of Atisreal, Cristina Du-mitrache of Cushman & Wakefield, Mihai Grigore of Colliers, Dan-NicolaeIvanov with Jones Lang La Salle, Resul Kilic of King Sturge, IoanaMomiceanu of Atisreal, Aurora-Speranta Munteanu with PricewaterhouseC-oopers, Alexandru Pocatilu with King Sturge, Bogdan Victor Sergentu withDTZ Echinox, Florin Sorea of Cushman&Wakefield, Victor Stan with SHMSmith Hodgkinson and Levis Vlad with Jones Lang La Salle.

RICS awards 16 local memberships

BUSINESS REVIEW / April 6 - 12, 2009 15

A N A L Y S I S

Mobile banking services have been available for some time tocustomers of telecom operators, with some lenders, such as BancPost, Raiffeisen and BRD, already offering them and othersconsidering entering on the market. Just a week ago, good.bee, amember of Erste Group, launched banking services via the mobilephone in partnership with the Romanian Commercial Bank (BCR),aiming to reach customers who have never used banking services.

Mobile banking servicesgo fishing for clients

By Otilia Haraga

“In the last few months, we’veseen some interesting increases inthis area. There is a greater focusfrom banks on bringing this serviceto their customers,” say officialsfrom Vodafone Romania.

The economic crisis has con-

tributed, to an extent, to the successof this service, since customers areconstantly looking for more effec-tive ways to rein in their costs andspending. “We are expecting thenumbers to increase as banks willpush the service more this year dueto the new economical context,” saycompany officials.

According to research by

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The service is expected to be most popular with the young, due to their high mobile phone usage

good.bee Romania, there are cur-rently 8.2 million Romanians whodo not have access to basic bankingservices. “There are people who donot even have a bank account or adebit card. Most do not have accessto these services because of the dis-tance from where they live to theclosest bank branch,” Sorin Bulai,general manager of good.bee in Ro-mania, tells Business Review. How-ever, Romania has a high mobile te-lephony penetration, which makes ita favorable market for mobile bank-ing services.

“If we take into account the sizeof the country, the distance betweenlocalities and the popularity of mo-bile telephony, transactions througha mobile phone represent a very at-tractive offer. We are extremely con-fident in the success of the project inRomania. We also intend to launchgood.bee Mobile Transactions onother European markets where wework, which have the potential forsuch a service,” said Sava Dalbokov,general manager of good.bee Hold-ing CEE.

However, Bulai says the level ofthese services on the local market isvery low at the moment. “Severalbanks have already announced proj-ects targeting the mobile bankingsegment,” he says, and the GM ex-pects other players will follow suit.This could afford a good head startto those that move fast on the mar-ket, especially in attracting thosemembers of the public who have stillnot been “claimed” by any bank.

At the moment, all the mobileoperators on the Romanian marketoffer their customers the opportunityto access mobile banking services,in partnership with lenders such asBRD, Raiffeisen, BCR and BancPost.

Still, there are several clear dif-ferences between the mobile servic-es offered until now and the one of-fered through good.bee. They con-sist largely in the type of customer,in the sense that good.bee/BCRserves postpaid and prepaid cus-tomers, while Raiffeisen and BRDmobile banking is available only topostpaid. When signing up for thegood.bee/BCR mobile banking serv-ice, customers do not have to go to abank branch.

Currently, Vodafone cooperateswith Raiffeisen and BRD as part ofthe Vodafone Mobile Banking serv-ice, and more recently with good.beewhich facilitates banking transac-tions via mobile phone in partner-ship with BCR. The plans for ex-

tending this service in collaborationwith other banks will not be expand-ed for the time being, at least inVodafone’s case. “We do not haveother plans available for the mo-ment, but we are open to discussionsand new opportunities,” say compa-ny officials.

good.bee Service RO wasfounded in September 2008 as a re-sult of the partnership between theErste Foundation and Erste Group,which were joined at Central Euro-pean level by Wizzit Ltd of SouthAfrica, a pioneer of paymentsthrough mobile phones. The share-holders of good.bee Service RO al-so include consultancy companyCentral European Financial Servic-es SA.

good.bee Mobile Transactionsoffers users the possibility to checktheir current account, recharge anymobile card, transfer money instan-taneously to any other good.beeclient, transfer money to any ac-count in RON in Romania, or man-age their account from a mobilephone. Additionally, people can alsoperform standard operations with adebit card – make cash withdrawalsfrom any ATM in the country orabroad, pay in the stores throughoutthe country and abroad, pay bills atthe BCR’s ATMs as well as carryout any transaction that can be madein BCR branches (deposit/with-drawal of cash, payment orders andso on).

good.bee Mobile Transactionswas designed to be used by any per-son over 14 years of age with an av-erage education. “Still, consideringthe popularity of mobile phonesamong the young, we believegood.bee Mobile Transactions willbe much more attractive to activepeople aged between 14 and 35years old,” says Bulai. He explainsthat this service is available “any-where and to everybody” and thecosts of using it are relatively low,which qualifies it as a “general use”service.

Bulai estimates the service willhave more than 100,000 customersby the end of 2009. good.bee Serv-ice RO currently has 24 permanentemployees, most of whom work inthe operations and customer supportdepartments. The sales team is coor-dinated through eight regional cen-ters located in eight of the biggestcities in Romania. The initial invest-ment amounted to EUR 1.5 millionand the share capital reaches overRON 6 million (about EUR 1.4 mil-lion). ■

BUSINESS REVIEW / April 6 - 12, 200916

A N A L Y S I S / F I L M R E V I E W

Danny Boyle’s 2008 smash hitSlumdog Millionaire is what kindof film? A. An uplifting rags to rich-es tale of a street child made good.B. Poverty porn, which shameless-ly cashes in on the deprivation ofMumbai’s slums. C. A beautifullyshot homage to India. D. A facileand predicable love story. Is thatyour final answer?

There can be few people leftwho have managed to avoid theSlumdog buzz, especially since itswept the board in February witheight Oscars. The story, in case youare one of the three people whohaven’t heard it, follows young Ja-mal (Dev Patel as an adult) on hisjourney from the Mumbai slums ofhis childhood to the precipice of agreat fortune, courtesy of TV gameshow Who Wants to be a Million-aire? But how can an uneducatedpauper, a mere slumdog, possiblyhave correctly answered a series oftough questions? Slippery hostPrem Kumar (Anil Kapoor) smellsa rat, and the Mumbai police haulJamal in for what the Bush regimemight euphemistically have termed“enhanced coercive interrogationtechniques” (viewers of a sensitivenature may want to cover their eyesfor the early scenes). Once un-hooked from the electrodes, Jamalstarts to explain that he got the an-swers right not through cheating,but because various episodes fromhis past, shown in flashback, eachcoincidentally corresponded to aquestion.

It’s a novel premise for a film,and one that works well, largely be-cause the flashbacks are such crack-ing stories. Humour, horror, love,crime and high drama are dished upin bite-sized chunks, against acolourful Indian backdrop. Whetherit’s the young Jamal burrowing out

of the business end of an outdoortoilet to get his favourite Bolly-wood star’s autograph, or a tenserace-against-time reunion with hislong lost love at a railway station,the vignettes are always gripping,even if they test the bounds of cred-ibility too often.

Accompanied on his travels byhis double-crossing brother Salim(Madhur Mittal), Jamal’s goal is tofind his childhood sweetheart Lati-ka (Frieda Pinto), from whom hebecomes separated in some of themost shocking scenes of the film.His nemesis is gangster Maman(Ankur Vikal), a recurring figure inthe trio’s lives. With its extremes ofpoverty and riches, broad-stroke ar-chetypal characters and reliance oncoincidence, there is something en-joyably Dickensian about Slumdog.Its good old-fashioned melodramaand thrills and spills galore make ithard not to be drawn in by this em-inently likeable movie.

But eight Oscars? More than theGodfather and Godfather II? Morethan Casablanca? For all that it is anexcellent piece of entertainment,Slumdog has a trite and predictableplot, one-dimensional charactersand appeals entirely to the heartwithout troubling the head. If thiswas the most Oscar-worthy moviemade in 2008 – and it could wellhave been – it does not say muchfor the current state of intelligentfilm. On the ethical side, the specta-cle of the child actors involved be-ing paraded at the Oscars’ ceremo-ny then shipped back to the slumsin which they live was discomfiting– although the picture celebrates In-dia as much as it censures it.

Such is Slumdog’s charm, that itfeels churlish to make such com-parisons or criticisms. This is cine-matic comfort food of the highestorder.

Debbie Stowe

Director: Danny Boyle, LoveleenTandan (co-director India)Starring: Dev Patel, Freida Pinto,Madhur Mittal, Anil Kapoor,Ankur VikalOn at: : Hollywood Multiplex,Cityplex, The Light, Movieplex

Final answer? Dev Patel and Frieda Pinto

FILMREVIEW:Slumdog Millionaire

Ever since the economic downturn rang the alarm bells, companies have

sought to cut costs, slashing HR, marketing and advertising activities, along

with trying strategies of restructuring businesses. Meanwhile, they still hope

to make a profit. Some of the PR agencies affected told Business Review how

such firms are coping with the industry slump.

PR agencies and clientsreshuffle strategies in 2009

By Magda Purice

Firms delivering communicationpolicies and advertising fear of an aver-age loss of around 35-40 percent oftheir annual turnover due to clients’ lowbudgets for this year. According to FirstImpression agency, the main changeswill be seen in BTL and outdoor. Printand TV are also in the firing line, asthey involve high costs for campaignsthat are not certain to deliver fast re-sults.

At end-2008, agencies identified ashift in their client briefs for this year,with more precise targets and faster andclearer results for public communica-tion. Judging by the agencies whichagreed to reveal their strategies, itseems that PR and internet advertising,through their small decreases, will takeup the slack left behind by cuts in mar-keting campaigns and the advertisingmix of TV and print.

CHEAP BUT CREATIVE STRATEGIESA study by Anteea Consulting,

which specializes in delivering market-ing and business solutions, found thatthe worst falls have hit the mass marketevents segment, large advertising cam-paigns and business events. Accordingto the agency’s data, clients have beenadvised to switch their advertising orimage campaigns to social marketingand creative events, as well as PR cam-paigns. The agency said the only firmsto have entirely ceased to outsourcetheir advertising and communicationservices to it are the big real estate ac-counts.

“Clients from the real estate and au-tomotive industries have significantlyshrunk their project volumes, while theongoing ones are strictly planned andapproved quarterly. Pharmaceutical andretail clients have kept up the steadytrend of the last few years, with no big

changes,” added Dan Florescu, con-sultant media and partner at SoundCommunications. The loss in Agama’sportfolio took the form of a Romaniancompany (e.n: from the healthcarefield) which decided to cancel its part-nership with the agency and hire an in-ternal junior PR.

Representatives of First Impressionsaid, “Stopping outsourcing may bal-ance the books but only if the substituteis well trained and experienced.” Bian-ca Iuga, associate partner of AgamaConsulting notes the danger of substi-tuting a specialized service from a sen-ior consultant or an agency for a juniorwho only executes and does not delivercommunication strategies.

On a challenging year for most in-dustries, Saatchi & Saatchi still intendsto make a profit at end-2009. Aftermaking a loss in 2007, the next yearwill be profitable for the agency, ac-cording to MD Mona Opran. “Eventhough the market is tipped to freeze,the agency’s business will surely grow.Even now, company revenues have al-ready exceed the forecasts from early2008, and next year is expected to bringeven higher growth with the focus onthe new-business segment and the im-provement of our creative product.Most clients have cut their media budg-ets but, even so, the creative componentwill bring revenues to the agency andclients as well,” said Opran earlier thisyear.

In 2008, the agency grew organical-ly by 15 percent. Although its represen-tatives do not foresee concrete prob-lems for 2009, they are not ruling outdifficulties which could lead to budgetcosts or downsizing. “I think that abright idea sells better than a good one.In the next year, we will have to calcu-late 10 times and cut once when spend-ing money, but we also have to under-stand the way that our consumers thinkwith the right message,” Opran said. ■

BUSINESS REVIEW / April 6 - 12, 2009 17

R E S T A U R A N T R E V I E W

Bistro diningL E B I S T R O A T C E N T R E V I L L E , 2 - 4 L U T E R A N A S T , T E L : 0 2 1 3 0 5 3 8 3 8

Two years ago I wrote this placeup in this newspaper with thecomment that the food was

quite good, but the place was an ab-solute dump!

I heard they had refurbished, soI returned to see if the food couldmatch their new décor. They havespent a few sheckles on the refur-bishment, which took some sixmonths to complete.

The restaurant is now on twolevels. There is the Luterana Streetentrance, which is allbistro/bar/wood with neutral col-ored plaster walls, and two floors upin the lift there is their daytime andsummer terrace restaurant (samemenu) attached to the fabulous gar-den terrace of the Radisson.

With glass walls, they capitalizeon the Radisson’s beautiful terraceand pool. OK, in the summer youwill not be sunbathing around theRadisson’s pool, but you can pressyour nose against the glass wallsand dream on.

The House is pretty confident inits potential as they have not yeteven posted their name outside. Suf-fice it to say that the Luterana en-trance is impossible to miss (evenwithout a name) as the Centre Villebuilding occupies almost the entirestreet of Luterana on the right handside.

So, let’s eat. At 8 o’clock onTuesday, the place was more thanhalf full after being open for onlytwo weeks. Proof if it be needed thatword has gone around. Was it be-cause it was new and people wantedto check it out, or was it because itwas really good? Read on and de-cide for yourself.

I selected as my dinner date adifficult-to-please, choosy littlething who doesn’t eat meat. Thiswould normally present a problemfor the House, as most good chop-houses in this town are seriouslygeared up to satisfy carnivores. Butthis girlie was as happy as a ‘pig inhog heaven’ when she saw themenu.

Apart from salads, there was anample selection of fish dishes. Al-though girlie doesn’t eat meat, she(as part of a growing trend in town)does eat fish. God forbid that I

would ever take out a loony vege-tarian!

So we started with a huge ‘fo-caccia with calamari, shrimps, gar-lic sauce and peppers’, all of it gar-nished with fistfuls of fresh corian-der. Focaccia is a heavy flat breadwhich is seasoned and topped with aselection of herbs such as oregano,thyme and basil, and is usuallycrisped-off with Parmesan. I wasdelighted to witness the House bak-ing their own focaccia in a clayoven. It was excellent.

We passed on further focacciassuch as: vegetable only (no thanks),minced lamb with pomegranatesauce (a Persian favourite), or withchicken, pesto, ruccola and Parme-san.

Whilst girlie was furiously stuff-

ing her face with focaccia, I tooksome time out to peruse the menu. Itis absolutely not Italian, althoughthere were some look-alike Italiandishes. Let us just say it was a caseof ‘Middle East meets MiddleMediterranean’.

To prove my point there was achoice of three unpretentious, sim-ple roast dishes of dorada with oliveoil and lemon, or prawns, or chick-en legs with a yogurt dip. Thesewere served on a hot plate with an ample portion of veg-etables.

There was a heavy leaning to-wards Greece with all the starters,including a superb platter of Greekolives and fiery red pickled pepper.If you don’t know your olives,please trust me that the House’s

choice of Kalamata olives was awise decision, for they are probablythe finest in the world. Deep purplein colour, they are fat and meaty.They contrast well with the Thassosolives which are mild, salted andsundried.

There was much you would ex-pect from a Greek menu, with nu-merous other starters using safe sta-ple ingredients such as: hummus,tabouleh, falafel, pine nuts, mint,goat cheese and tahina sauce.

Then the menu flips away fromGreece with six Italian pasta dishes.You will know them all, they aresafe and recogniseable.

For mains we had house-madesausage served on a mountain ofmashed potato, chestnuts andcaramelized apples. My mistake, asI should have realized that thesausage would be flavoured to Romanian tastes, rather than Eu-ropean, but no matter. They also had mititei on the menu. Enoughsaid!

Their Argentinian steaks were asgood as they get. There has beenmuch hype about Argentinian beefsince the Intercontinental Hotel in-troduced it to Bucharest three yearsago. It subsequently caught on like awildfire with other restaurants.Some imports were good, otherswere average. However, less en-lightened restaurants chose the near-est equivalent imports from Brazilwhich were absolute crap.

But it appears that there is morethan one importer of Argentinianbeef, and the House has chosenwell. Go for it

There was also fresh tuna andsalmon in a pistachio crust, both ofwhich we passed on, but we shalltry on our next visit.

This is a nice, friendly placewith nice friendly staff. It is ab-solutely one of the better chophous-es I have witnessed this year.

Michael Barclaymab.media@dnt.ro

Greece is the word: The Med meets the Middle East at the renovated Le Bistro at Centre Ville

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BUSINESS REVIEW / April 6 - 12, 200918

E V E N T S

A partnership between Unirea Med-ical Center (CMU) and the RomanianRoyal House will see that impoverishedpeople who apply to the Royal House inneed of medical attention are directed to

CMU clinics where they will receivecare free of charge.

Patients can receive any kind of con-sultation and treatment available withinthe CMU clinics and hospitals. At thesame time, those who need assistanceand support in finding and accessing thenecessary financial and medical re-sources will also receive help.

“The partnership with the RoyalHouse gives us the chance to come tothe aid of severe cases and offer a glim-mer of hope. We are grateful to the Roy-al House for the involvement and sup-port given to this project which we hopewill be a hand reaching out to peoplewho are most in need of support,” saidWargha Enayati, general manager ofCMU.

Otilia Haraga

CMU and Romanian Royal Houseoffer needy free medical treatment

King Mihai I came to visit the CMU facilities

MED

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Controversial rock icon Sinead O'Connor willplay Bucharest on June 11 at the Arenele Ro-mane venue. The singer is equally known by thelarge public for the song “Nothing compares 2U” and for her penchant for creating controver-sy. The Irish artist started her career by appear-ing with U2’s guitarist The Edge on the sound-track of the movie The Captive. Later, she criti-cized U2’s music as “bombastic,” to the detri-ment of her relations with the music world. Tick-ets for the concert can be bought for RON 79 onApril 17 and later at RON 109 through the sitewww.ticketpoint.ro as well as from the box of-fice of the Palace Hall and in the Diverta storenetwork in Bucharest.

World Autism Awareness Day,which aims to increase awareness ofautism in society and encourage ear-ly diagnosis and intervention, wasmarked worldwide last week onApril 2, as well as in Bucharestwhere children, parents, volunteersand supporters of this cause met inUniversitate Square. There is cur-

rently an ongoing campaign “To-gether We Will Defeat Autism” thathas been unfolding since November2008, initiated by the Romanian An-gel Appeal Foundation, the Founda-tion for the Development of the Civ-il Society and the Vodafone Founda-tion.

Autism is a neuro-biologic condi-tion which appears at birth or aroundtwo-three years of age but can be di-agnosed at 18 months or earlier. Suf-ferers have socializing, verbal ornon-verbal communication deficien-cies and stereotypical and repetitivebehavior. International statistics fromthe 1990s show the incidence ofautism-related conditions is 1 forevery 166 children, making it a morewidespread condition than cancer,diabetes, AIDS or Down’s syn-drome. Autism can appear in anyfamily irrespective of social environ-ment, race or ethnic group and is fourtimes more widespread in boys.

Otilia Haraga

World Autism Awareness Daymarked in Bucharest

Bucharest joined the group of cities whereWorld Autism Awarness Day was celebrated

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TIVE PR

Three theater plays by actor andplaywright Mimi Branescu will bestaged at the Act Theater with thehelp of Raiffeisen Art Project.

“All my theater texts are more orless successful attempts. They arean exercise for the actors first of all.They do not contain profound mes-sages and do not propose or debategrand, universal themes, because ofthe impossibility of doing so. Theyare inspired from the immediate re-ality and told honestly,” said

Branescu of his plays. The three plays are entitled

Flowers, Movies, Girls and Boys(staged by director Vlad Massaci),The God of Next Day (ClaudiuGoga) and At Dad’s Place (Alexan-dru Dabija).

Raiffeisen Art Proiect, an initia-tive of Raiffeisen Bank, aims to sup-port and promote the developmentof valuable projects for Romanianculture.

Otilia Haraga

Three plays staged courtesy ofRaiffeisen Art Project

Michael Bolton will return to Romania for a newconcert entitled “The Very Best of Me”, whichwill include all his famous hits. Bolton is a pro-lific artist with over 53 million records sold, twoGrammies and six American Music Awards. Hehas also composed songs for other equally fa-mous artists such as Barbra Streisand and Cher,and co-authored songs for Bob Dylan and DianeWarren. The American has played alongside Lu-ciano Pavarotti, Placido Domingo, Ray Charlesand BB King. He is also a keen philanthropist,having donated over USD 3.7 million to improv-ing the life of disadvantaged individuals world-wide.

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Pioneers of electronic music Kraftwerk will per-form in Bucharest for the first time on July 12 atthe Palace Hall. Kraftwerk, a German band thatwas founded in 1970, made a major contribu-tion to the development of electronic music. Areal avant-garde group at the time of their ap-pearance on the international stage, they playeda musical style known as synthpop, electro,techno, house and intelligent dance music. Tick-ets for the concert cost RON 100, 150, 220, 300and 500 and can be bought from www.mytick-et.ro and the Diverta store network.

The price of the one-day tickets for theB’Estfest international festival will remainunchanged at RON 110 until the Easter holi-days. The organizers, Emagic Entertainment,had announced it would raise the price toRON 130, but this will now happen afterApril 20. This year’s line-up includes THEKILLERS ( in pic) Thievery Corporation, Mo-by, Franz Ferdinand, Motorhead, Santana,The Charlatans and The Ting Tings. B’Estfesttakes place between July 1 and 5 at Romex-po. Those who wish to attend more days ofthe festival can acquire a subscription for Ju-ly 2, 3 and 4 from the site www.myticket.roor from the Diverta store network.