Romanian Daily

Private Pensions Funds Must Have Capital of €1.5 mln

IulianBulandra — 2006-07-27T10:28:00+00:00

The companies that manage private pension funds must have at the moment of submitting their authorization request a minimum share capital equivalent in lei to the amount of 1.5 million euros, calculated at the reference rate of the National Bank of Romania (BNR), stipulates a draft norm of the Private Pensions System Supervision (CSSPP), according to Rompres and ING Financial News. The sums destined for participation in the share capital of the pension company should come solely from their own sources and must not represent drawn credits or borrowed money, under irrespective what titles, from other individuals, authorized individuals, corporate entities or entities without legal personality.

The private pensions funds and their managers are not allowed in their publicity materials to make either estimations or prognosis as for future performances, or comparisons between different optional pensions funds or managers, CSSPP says in its draft norm published on the institution's site.

As well, the private pensions funds and the pensions companies that manage them are forbidden to use expressions such as "guaranteed results," "guaranteed gains" or any other wordings that can create the illusion that a gain has been granted, formulas of the kind "the biggest pensions funds managing company", "the best optional pensions scheme", "the best performing fund" and/ or other similar publicity, as well as the use of previous, present or potential participants' statements.

Almost three million Romanians, now insured in the public pensions system, are to contribute, starting next year, to the privately managed pensions funds, according to estimations made by CSSPP managing director Mircea Oancea.

The first funds in the privately managed pensions system are expected to be collected in July 2007 and it is estimated that 1.5 million people, up to 35 years old, will participate in this pillar II system (privately managed pensions) in the first year since being set up.

It is mandatory for them to adhere to a private fund, in addition to an approximately equal number of people, aged between 35 and 45, who will also opt to participate in a private fund, as well.

Likewise, some 500,000 participants are expected to adhere to pillar III (occupational / optional pensions) in its first year of activity.

The Government in June approved modifications to the law on privately managed pensions funds.

According to the new rules, people aged up to 35 years, insured in the public pensions system in line with Law No 19/2000, are compelled to join a privately managed pensions fund.

For people aged up to 45 years, who are already insured and contribute to the public system of pensions, the contribution to a privately managed pension fund remains optional.

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Proprietatea Fund eager to see the trading floor

IulianBulandra — 2006-07-26T07:45:00+00:00

Authorities are trying to clarify legal issues surrounding the Proprietatea Fund as soon as possible. Rather than planning a special session in Parliament, authorities are preparing an emergency ordinance, which will speed up the process of floating the fund.
The project for the changes in legislation concerning the Proprietatea Fund was sent to the government and will be approved through an emergency ordinance, so that the National Securities Commission can authorize it and the floating of the fund can be done as soon as possible, yesterday said Alexandru Paunescu, the president of the fund. Created in 2005 as a solution for reimbursing former owners dispossessed by the communist regime whose properties cannot be given back, the fund became operational as a share company in December 2005.
"I do not wish to make predictions on the final form of the law. Changes target making the Proprietatea Fund more effective, as well as its floating, which is our top priority, so that shareholders can use the shares granted to them by the fund," Paunescu said. He believes the changes in legislation will solve all the problems of the fund, opening the door for a precise schedule in the activity of the fund, to be strictly respected. The floating of the fund could take place even before an administrator is selected, so that shareholders can benefit from their shares sooner, Paunescu announced. He estimates that the floating could take place in September or October this year. The decision and the international bidding through which an administrator is selected will be established through a government decision. "It will be a public, transparent, governmental process," Paunescu claims. The task book and the criteria for the selection process are currently being drafted. The financial offer will carry significant weight in the selection process, but the experience of the company in the area, its assets, and the submission of a guarantee will also count. The winner of the bidding for the administration of the fund will begin negotiations on the investment strategy made by the consultant, British company Cordea Savills. In mid-May, 31 international financiers submitted letters of interest for the administration of the Proprietatea Fund. Concerning a provision in the current legislation, which stipulates that the fund may only be listed after all the companies in its portfolio are listed, Paunescu explained that the new law project simplifies procedures so that only a part of the companies in its portfolio need to be listed. "The Proprietatea Fund is a minority shareholder in many companies, it cannot make decisions concerning floating. Regarding companies in which the state and the Proprietatea Fund are shareholders, we could assume the responsibility of launching floating procedures. In the companies partly owned by private shareholders, the process will be more difficult. It would mean an adulteration in the business of private individuals, "Paunescu said.

Opposition criticizes legal solution

The Social Democratic Party (PSD) argued that an emergency ordinance for the floating of the Proprietatea Fund is an infringement of the Constitution. PSD spokesman Cristian Diaconescu mentioned that the European Human Rights Court has ruled in three successive litigations that the setting up of the Proprietatea Fund does not guarantee that former owners will be reimbursed. On July 20, 2006 the Strasbourg court decided, in the case of Radu versus Romania, that the Proprietatea Fund is not an appropriate way, in its current form, to reimburse owners.

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Individual accounts, 9% of the funds market

IulianBulandra — 2006-07-25T07:42:00+00:00

Individual investment accounts had amounted to almost 9% of the mutual fund market at the end of the first six months, and assets corresponding to these accounts doubled in the December 2005 - June 2006 period, to 40.3 million RON (11.3 million euros). The core business of the investment management companies (SAI), comprises, besides managing investment funds, the management of individual portfolios, including those owned by pension funds.

Thus, these companies provide personalised services to investors who hold significant sums and want to see higher returns. According to data from the National Securities Commission (CNVM), the value of assets in individual accounts totalled 20.1 million RON (5.6 million euros) at the end of last year, of which 18.2 million RON (5.6 million euros) for individuals. Net assets of mutual funds stood at 472.1 million RON (132.3 million euros) at the end of June, according to information from the UNOPC (the National Union of Collective Investment Bodies in Romania), an estimated 40% increase against the level seen the previous year.

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Property Fund collects dividends worth 18.5m euros

IulianBulandra — 2006-07-25T07:40:00+00:00

The Property Fund has collected dividends worth 18.5 million euros (65.7 million RON) from Petrom, accounting for a 9.89% stake owned in the biggest company in Romania. The fund received dividends for the whole of 2005, although it was registered in the Trade Registry just three days before the end of the year. On the 29th of December, 2005, the Property Fund was set up as a joint-stock company with the purpose of awarding damages to owners who had been forcibly dispossessed of their houses during the communist regime.

It has stakes in several companies among which is Petrom. The Ministry of Economy used to hold a 40.74% stake in Petrom's capital, but transferred a 10% stake to the Property Fund. The Minister of Economy, Codrut Seres recently stated he would propose to the Government that Fondul Proprietatea should only collect dividends for the three day-period of 2005 when the Fund was legally registered.

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SIF assets stand at over 6 billion lei in first six months

IulianBulandra — 2006-07-24T07:59:00+00:00

The financial investment companies (SIF) reported at the end of the first six months of 2006 an overall volume of net assets worth 6.52 billion lei (1.827 billion euros), down by 2.6 percent as compared with the level registered at the end of the previous month and up by 28.6 percent as against the end of 2005, the National Union of Collective Investment Organisations informs.
The overall drop of net assets in June too is a continuation of the trend of the previous month, prompted by modifications over this period to the shares traded on the stock market.

The modifications to the shares in the portfolio of financial investment companies directly influenced the level of financial investments in the short run as the general drop of the five financial investment companies was 5.3 percent as against the previous month and the decrease of the listed shares in the portfolio was 5 percent when compared with the same period. The reduction of net assets for each SIF is not uniform, as it registered significant variations and this was mainly prompted by the depreciation of the portfolio of listed shares held by each SIF.

The cumulated capitalisation level of the five SIFs reached as much as 5.07 billion lei (1.4 billion euros) at the end of June, down by 22 percent over the overall volume of net assets. Over the same period, SIF Moldova and SIF Oltenia had the biggest liquidity, 8.34 percent and 7.36 percent respectively, being traded from the share capital from the overall of 12,181 transactions for SIF Moldova and 13,258 transactions for SIF Oltenia.

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Daianu, shareholder in a company administering mutual funds

IulianBulandra — 2006-07-24T06:31:00+00:00

Former Minister for Finances Daniel Daianu acquired in April a stake accounting for seven per cent in the stock of SAI Investica Asset Management, a decision based on the high development potential of the mutual fund industry in the coming years. “The local mutual fund industry has a high development potential in the years to come. The financial mediation rate is still rudimentary in Romania, and companies such as those which administer mutual funds have substantial growth prospects,” Daniel Daianu told Mediafax. He mentioned he paid approx. EUR 10,000 for the shares. The Investica Asset Management was incorporated in December 2005, shareholders including Senator Verestoy Attila’s son, who currently holds 78 per cent of the equity. His stake previously accounted for 80 per cent of the stock.

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Proprietatea Fund cashed 65.7 M RON in dividends from Petrom

IulianBulandra — 2006-07-24T06:30:00+00:00

The Proprietatea Fund cashed dividends for year 2005 equal to 65.7 M RON (EUR 18.5 M) from Petrom, corresponding to its stake of 9.89 per cent in the share capital of the company, although the Fund had registered with the Trade Registry only three days before the end of that year.

The Proprietatea Fund was set up as a joint stock company on December 29, 2005, with the goal of compensating the owners whose property had been seized during the communist regime. The fund has participations in several companies, including Petrom.

The Ministry of Economy and Trade (MEC) held a stock package of 40.74 per cent in Petrom, of which it transferred 10 per cent into Proprietatea Fund.

Economy Minister Codrut Seres has recently said he will propose Government that Proprietatea Fund cashed dividends from Petrom only for the three days in 2005 when the Fund registered with the Trade Registry.

Petrom shareholders okayed last April the payment of dividends for 2005 worth 738 M RON (circa EUR 210 M), for a net profit of 1.416 bln RON (EUR 391 M).

Another decision reached was for the payments of dividends due to MEC and the Proprietatea Fund to be made after the passage of a normative act establishing how dividends for 2005 will be distributed for the shares transferred between the two stockholders, or through an agreement between the two.

The General Meeting of Petrom Shareholders (AGA) established July 17, sixty days since AGA published the decision in the Official Gazette, as the deadline by which MEC should reach an agreement on the matter at hand.

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SIF Muntenia H1 profit, 30% above full-year projection

IulianBulandra — 2006-07-21T05:16:00+00:00

SIF Muntenia posted an income of 83.78 million RON (23.67 million euro) in the first half of the year, over three times higher than the net profit from the same time last year.

The company's profit is at the same time 30% higher than the net profit budgeted for the entire year. Another two SIFs, Oltenia and Banat-Crisana in turn posted higher six-month profits than budgeted for the entire year.

SIF Muntenia ranks second among financial investment companies in terms of the first half profit. The highest net income at the end of June was that of SIF Oltenia, which had made 91.5 million RON (25.8 million euros) income.

The profit the company posted is 39.7% higher than at the end of May, with the growth largely due to the dividends the SIF collected from BCR last month. Five months into the year, SIF Muntenia's profit stood at 59.96 million RON (16.9 million euros).

"We believe the six-month results to be very good. The difference compared with the end of the month is largely due to the 20 million RON (5.6 million euros) dividends from BCR we collected last month," specified Petre Szel, chairman of Muntenia Invest, the company that manages SIF Muntenia.

Szel, however, stressed that the results were only preliminary figures and could subsequently be somewhat different from the final results, which are to be presented in mid August.

"The results are preliminary. They are to go through an auditing process and the final results could see some changes," Szel specified.

The company made most of its profit early in the year, when it sold its 10% stake in pharmaceutical company Sicomed, for more than 15 million euros.

This sale allowed SIF Muntenia to post a 56.86 million RON (15.6 million euros) profit. The company later sold 2% in pharmaceutical company Biofarm Bucharest for 4.5 million RON (over 1.2 million euros) in February.

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SIF Oltenia and Banat-Crisana exceed expectations

IulianBulandra — 2006-07-20T06:07:00+00:00

In the first half of this year SIF Oltenia derived net income worth 91.5 million RON (25.8 million euros), the biggest profit of the four financial investment companies that have so far presented their half-year figures. SIF Oltenia's profit is 70% higher than posted during the corresponding period of last year and 30% above the level budgeted for the entire year.

SIF Banat-Crisana also reported higher than expected income. SIF Muntenia is yet to release its data for the first half, but is also likely to report profits higher than budgeted for the end of June, as the company was very close to its annual budgeted level after the first five months of the year.

SIF Oltenia's profit is only 4.6% higher than the level registered at the end of May, 38 million RON (10.8 million euros), even though the company in May collected the most important dividends, from banks and from Petrom.

"In May, we collected the dividends from BRD, BCR and Petrom. Last month, the most important source of revenue was the profit from the sale of the majority stake in Avicola Tartaresti and from the exit from Elpreco," specified Tudor Ciurezu, general deputy manager of SIF Oltenia.

According to company management, the profit the company derived in the wake of the 14.56 million RON deal, through which it sold a stake in Avicola, came to 9 million RON.

In June, SIF Oltenia also collected 6 million RON after it withdrew from Elpreco, as part of the de-listing process the company is undergoing.

SIF Banat-Crisana, which was the top profit maker after the first five months of the year, following the sale of the 24.5 million RON stake it held in Silcotub Zalau, in late June reported profits worth 72.67 million RON (20.5 million euros), around 46% higher compared with the income registered in the same period of last year.

This company's profit is 27% higher than the net income budgeted for this year. After the first 5 months of the year, SIF Banat-Crisana's income stood at 64.6 million RON (18.4 million euros).

The other two SIFs that reported H1 financial data, SIF Moldova and SIF Transilvania, posted profits of 26.15 million RON (7.4 million euros) and 35.4 million RON (above 10 million euros), respectively.

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Proprietatea Fund becomes WTC Bucharest shareholder

IulianBulandra — 2006-07-20T05:31:00+00:00

The Proprietatea Fund became a shareholder in the World Trade Center Bucharest after buying a 19.9 percent stake in the company from the Authority for the Recovery of State Assets (AVAS). The nominal capital of WTC Bucharest remained unchanged at approximately 2.2 million euros following the transaction. World Trade Center Bucharest was created in 1994 as a multinational company in which the Romanian party held 55 percent of the shares, the rest belonging to several French companies. The company registered revenues last year totaling 14.8 million euros, 15 percent less than the previous year. Additionally, WTC Bucharest had debts owed to AVAS amounting to more than 60 million euros.

The Proprietatea Fund submitted a legal complaint against the oil company Oil Terminal, as the latter allegedly has not paid the fund dividends owed for 2005. The Proprietatea Fund requested the annulment of a decision made by Oil Terminal's general shareholders assembly on May 26, through which it approved the payment of the dividends would go to the Ministry of Economy and Commerce (MEC), but only after the latter and the Proprietatea Fund determine a way to share the dividends. MEC is the main shareholder (59 percent) of Oil Terminal along with the Proprietatea Fund (10 percent) and the investment fund Broadhurst Investment Ltd.

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