AVAS VICEPRESIDENT CRISTINA CHIRIAC: Erste Bank has fulfilled a substantial part of its post privatization obligations concerning BCR

• The listing of the shares of BCR on the BSE is among the provisions of the privatization contract, but the AVAS claims that it is "a stipulation for another"

• The decision to perform the listing or not has rested with majority shareholder Erste Bank from the beginning and still does

Reporter: What are the consequences of the fact that "Erste Bank" did not take BCR public, like the privatization contract stipulated?

Cristina Chiriac: I can very clearly tell you that the contract provides no sanctions in the event that BCR doesn't get listed.

Yes, the contract does include the condition of taking the bank public. But, in legal terms, this is a "stipulation for others". In other words, this provision was inserted into the contract to protect the interests of minority shareholders and it is subject to legislation in the area.

From the point of view of the AVAS, in its position of seller, and as party in this contract, it means that no claims of prejudice can be brought against it and that it cannot be held liable for any such losses.

The decision lies with the management of the BSE, as appointed by investors. Of course the lack of action from Erste, can be a topic of debate, negotiations, agreements or other legally accepted practices, between the majority and minority shareholder. But I repeat, the AVAS has no (legal) standing in these approaches. I know that there have been numerous opinions, which maintain that the AVAS would have had the option of going to court, and asking for damages, but I'll tell you that, according to the opinions of legal experts, this wasn't possible, since it was merely stipulation concerning others. And as for being awarded damages, that topic is not even worth discussing...

Reporter: Did "Erste Bank" fulfill its post-privatization obligations?

Cristina Chiriac: From the point of view of the obligations taken on by the buyer, based on the mere reading of the contract, we can see that it only stipulates penalties specific to the post-privatization obligations in relation to the failure to honor them, and only for the time the obligations stipulated in articles 13.3, 13.4 and 13.5 were in effect. The duration of those obligations expired in 2009.

The AVAS, following a rigorous analysis of the case and of the post-privatization documents, confirmed that these clauses have been honored.

At the moment, some of these clauses are still being monitored, such as the confirmation that the business plan has been honored.

The aforementioned clauses contain provisions concerning some aspects of a vital importance.

For example, the clause which includes the obligation for social protection, taken on through art. 13.3 lit. b, and which expired on October 12th, 2009.

The article stipulates the following:

"In its relationship with the employees, the Buyer pledges to honor the provisions of the collective labor contract concluded at the Bank level, and the applicable legislation. For a period of 3 (three) years from the Date of Finalization, the Buyer will set up a complex training program for the management and the employees of the Bank, according to the reasonable agreement with the Buyer, in compliance with the Business Plan, in order to ensure the high level of professional development of the Bank's employees; this program will include, as needed, training programs outside Romania as well as within other companies in the Buyer's group".

According to the documents accepted as legal proof that these clauses have been honored, remitted by the buyer, (through notary certified affidavits of its legal representatives and of the legal representatives of BCR), it has resulted that "EGB has honored the provisions of the collective labor contract of BCR and the applicable legislation in its relationship with the employees of the Company. It has also set up a complex program for the training of the company's management and employees, according to what was reasonably established by the EGB, in compliance with the Business Plan, in order to ensure the high level of professional development of the employees of the EGB. This program will include, as needed, training programs outside Romania as well as within other companies which were part of the Buyer's group". Besides, the Collective Labor Contracts negotiated and signed with the Federation of Independent Unions of BCR SA and by the representatives of BCR SA have been registered with the Labor, Social Solidarity and Family Department of the City of Bucharest.

Thus, from the point of view of the AVAS, the buyer has fulfilled its social protection obligations, both contractually and legally.

Also, I can tell you that the dividends have been paid out to the AVAS within the deadlines stipulated in the contract.

In the 2005 fiscal year, the AVAS was paid net dividends of 119,476,072 lei, and in 2006 the net amount earned by the AVAS from dividends was 95,362,147 lei.

Concerning clause 13.3, which would expire on October, 12th 2009, and which stipulates: "a) For a period of 3 (three) years from the Date of Completion, the Buyer, in its role of majority shareholder: (i) will not take any action intended to voluntarily dissolve or liquidate the bank without the consent of the Romanian National Bank, will not cause and will not agree without opposition (in order to avoid any doubts, without it causing any financial obligations for the Buyer) to the bank's bankruptcy, receivership or liquidation due to insolvency or any other type of default procedure stipulated by the Romanian legislation; ...", we consider it has been complied with.

It is obvious even at the current moment, when we are outside the oversight period for this clause has expired, that the bank has not been subjected to any dissolution, liquidation or bankruptcy procedure.