Ioan Cuzman, SIF1: "There are some questions concerning the Proprietatea Fund"

Ioan Cuzman, the chairman of SIF "Banat-Crişana" (SIF1), is less enthusiastic than the other market players about investing in the shares of the Proprietatea Fund, one of the "great hopes" of the domestic stock market, which is expected to get listed around three weeks from now. The chairman of SIF1 seems skeptical on the whether the Fund will actually have a say on the management of the companies in which it holds shares. He is also wary on the evolution of the price of the shares of the Fund after its listing.

"The Proprietatea Fund has some issues. For instance, the Fund"s stakes in the state owned companies where we don"t know exactly what is happening and where the Fund did not succeed in defending its point of view, like it happened in the case of the 400 million lei donation that Romgaz was required to make to the state budget", said Ioan Cuzman. He added: "There is also uncertainty about the behavior of the shareholders of the Proprietatea Fund after its listing; the supply of shares of the Fund may exceed the demand, which could have a significant effect on the price of the shares. At any rate, the Proprietatea Fund will be a lesson and a very important event for the Romanian capital market".

Unlike the other Financial Investment Companies, SIF "Banat-Crişana" only recently began buying shares in the Proprietatea Fund, by investing about nine million lei. SIF "Moldova" has by far the largest holdings of shares in the Proprietatea Fund (nearly 0.7%). SIF "Muntenia" and SIF "Transilvania" have also reported investing several million lei in shares of the Fund, in the last months of 2010, while selling part of their holdings in "BRD Groupe Societe Generale".

• Predictions: 2011 earnings, similar to those of 2010

Last year, the SIFs were some of the companies that disappointed investors, as the BET-FI index of the five companies posted a drop of around 10% at the end of 2010. In the first nine months of the year, SIF1 reported a net profit of 44.3 million lei, down almost 60% over the similar period of 2009.

However, Ioan Cuzman hopes that in 2011, SIF "Banat-Crişana" will post earnings similar to those of 2010, especially since his predictions on the evolution of the Romanian economy in 2011 are rather cautious: "Concerning on how we expect SIF1 to do in 2011, we hope we succeed in getting at least the results of 2010. We are planning to change our strategy for the portfolio, we want to trade on the foreign markets, but we have found that this is a lot more difficult than we thought. There are many technical issues that need to be worked out first, that are related to the Depository where the stocks will be held, and with the intermediary we would use for the acquisitions etc. Our forecasts on the economy in 2011 are rather moderate. I think we should be glad if we were to have an economic growth of zero".

SIF1 is a party in a lawsuit against Banca Transilvania, which requests the voiding of the Decision of the Bank"s General Shareholder Meeting made at the end of the month of April 2010, when the shareholders rejected the request made by SIF1 that the bank"s directors be elected using the cumulative voting method. At the end of 2010, the Commercial Court of Cluj rejected the request made by SIF1. Ioan Cuzman says that the company"s managers will decide if they take the lawsuit to the higher circuits.

The Romanian Security Commission recently denied the request of several companies of the "Banca Transilvania" Group to revoke the Instruction no /12007 concerning the 1% threshold for the size of the stake that any investor is allowed to hold in one of the five Financial Investment Companies. The representative of the companies belonging to the "Banca Transilvania group" requested that the counting and the voiding of the voting rights that exceed the 1% threshold would be done by the General Shareholder Meeting, but the answer of the Romanian National Securities Commission was that these procedures are the responsibility of the Board of Directors of SIF 1.