MEETING BETWEEN THE SIFs and ERSTE IN VIENNA Some of the SIFs insist that BCR pay out dividends

The managers of the five financial investment companies (SIFs) last week met in Vienna with members of the management of "Erste" to discuss the dividend policy of BCR for the year 2010, according to sources who did not wish to be named.

The meeting comes as the BCR group last year reported a net profit after taxes and minority interests of 465 million lei, down 46.7% over 2009, the lowest since the bank"s privatization. This caused Dominic Bruynseels, the executive CEO of the bank, to say last week that he would propose to shareholders, at the General Shareholder Assembly, to approve the capitalization of profits, just like last year, and expects the measure to be approved by the NBR.

Some of the five SIFs would not agree with a new share capital increase of BCR, claiming that Erste should comply with the terms of the privatization agreement and distribute 40% of the bank"s profit as dividends, the quoted sources claim. And last year, some of the FICS voted against the method of increasing the bank"s share capital by raising the face value of the bank"s shares, a move which did not result in a corresponding rise of the price of shares of the five SIFs", the quoted sources say. They also claim that, in the event the management of BCR will propose to increase the bank"s share capital, some of the SIFs will plead in favor of issuing new stock instead of raising the face value of the shares.

"We expect Erste to honor the obligations it has taken on through the privatization contract, namely to distribute 40% of the profit made in 2010 as dividends and to list the bank on the Bucharest Stock Exchange", said Claudiu Doroş, the executive vice-president of SIF "Moldova", who, added: "If we get another concrete proposal from the management of BCR at the General Shareholder Meeting, we will review it".

Last year, the SIFs were forced to give up on receiving any dividends they were expecting to receive from BCR, as the bank"s shareholders voted to increase its share capital by about 237 million lei, even though, according to the privatization contract, the bank was required to distribute 40% of its profit as dividends.