AN UNUSUAL, SUBSEQUENTLY RETRACTED IDEA: The liquidation of the BSE

The idea of the liquidation of the BSE, an opinion which was last month attributed by a financial publication to Oana Petrescu, coordinating partner of the management consulting division of Deloitte România, was presented on Friday, in a show on RFI, sponsored by OMV Petrom, even though on Thursday, the statement had been retracted by the author.

Journalist Constantin Rudniţchi, who hosts an economic show on RFI, did not quote the newspaper, but said simply: "Mrs. Oana Petrescu and Mr. George Mucibabici, two former bankers and current representatives of a major international consulting firm, have made a shocking proposal: the liquidation of the Bucharest Stock Exchange. The idea brings up a series of arguments: it is stated that the stock market has not attracted state-owned companies since 2008. There have been companies in which the state holds controlling interests, of which small blocks of shares have been listed on the BSE instead. Further more, the costs of listings and transparency are high, meaning that Romanian entrepreneurs are not attracted to the idea of taking their companies public. The two consultants say that the public is not informed and that it does not invest in companies listed on the stock exchange.

In conclusion, the proposal of Mrs. Oana Petrescu is for Romanian companies to get listed in London because it is more efficient".

The shareholders of OMV Petrom, the company which sponsors the RFI show, have recently approved the listing on the London Stock Exchange, at the proposal of the Proprietatea Fund. Moreover, Deloitte Audit SRL, which has questioned the functionality of the BSE, has been the independent auditor of Petrom between 2004 and 2010, and was subsequently replaced by Ernst&Young, which became EY.

Deloitte Audit SRL is also the auditor of the Proprietatea Fund, and it also provides for it the services concerning the secondary listing in London.

By the time the newspaper had gone to print, the representatives of OMV Petrom did not respond to our enquiry on whether they officially support the idea of the liquidation of the BSE presented in the RFI show.

It is the first time in the last 20 years when in Romania, the idea of the uselessness of the BSE and therefore of its liquidation gets spelled out.

The "Deloitte" representative seems to have blurted it out, and she subsequently nuanced her position in an attempt to make up for the blunder.

On Wednesday, Oana Petrescu was quoted with the following statement: "We need a discussion on whether, at the capitalization that Romania's economy can currently generate, the existence of the stock exchange is still opportune".

The development of the local stock exchange to a level where it starts being taken seriously as a possible financing source would require significant investments, and the effort may be greater than the possible benefit, she added, in the same article on Wednesday, wondering whether "it wouldn't be more effective to teach our companies to get listed in London?"

On Thursday, however, Oana Petrescu appeared with a retraction in the online edition of the same publication, without any explicit announcement that the article represents a right of reply. Her opinion also appeared in the print issue of the same newspaper, on Friday.

"I've never thought of questioning the existence of any institution, much less of one that works and is making progress. I accept my conformism, but, given my education in finance and my almost ten years of teaching capital markets at the Romanian Academy of Economic Studies, I have to say that I can not even imagine a market economy without a stock market", Oana Petrescu writes in her opinion piece, as she claims that the previous article did not reflect accurately enough reflect her statements made during a discussion with journalists.

How little could the journalist in question have understood, considering that the position of Oana Petrescu did a u-turn in 24 hours?

He further says: "The usefulness of an institution like the Bucharest Stock Exchange can not be disputed by anybody. As I've mentioned during the discussion, in the last few years we have made substantial progress in the functioning of the BSE.

The question that can be asked - and needs to be asked - is whether all of this progress of the Stock Exchange, otherwise remarkable, is enough to miraculously resolve all of Romania's financing problems, as it follows sometimes from the current public discussion".

In this apparent blunder, construed in the context of the behavior of Ludwik Sobolewski, the CEO of the Bucharest Stock Exchange, people without preconceived notions or blinded by the Pole's verbiage could even see the existence of an anti-BSE plan, which would end with its liquidation.

At the very least, the market should ask itself questions, at least on the ambivalent statement of the CEO of the BSE on the listing of the BSE in London, if not related to the defamatory statements made by Sobolewski concerning the BSE, which he reiterated in front of foreign investors.

On one hand, Sobolewski has said, in August, that a listing of OMV Petrom (SNP) in London, using the Global Depository Receipts (GDRs) would be clear proof of the underdevelopment of the domestic stock market, and the ASF, the government, the BSE and all of the institutions of the market should make greater efforts to help the stock market develop, according to Mediafax.

In the same statement for the press agency, the head of the BSE said: "If this intention (ed. note: the listing of Petrom in London) materializes, it will be a beneficial thing for the Bucharest Stock Exchange and for the Romanian capital market".

Sobolewski has already racked up a portfolio of statements about the underdevelopment of our stock exchange, which he often forgets that he leads himself.