NBR scores one for the management of Carpatica in the game against the majority shareholders of the bank

The conflict started between the Directorate of Banca Comerciala Carpatica (BCC), on one hand, and the shareholders Ilie Carabulea and Corneliu Tănase, on the other, yesterday had a new episode, which ended with the potentially decisive intervention of the National Bank of Romania (BNR).

After, the two shareholders, who together own almost 52.51% of the share capital of the lender, wrote on Wednesday night, to Johan Gabriels, CEO and president of the Directorate of BCC, that they were against the proposal to review a potential merger of the bank with another lender, yesterday the NBR suspended the voting rights of the two and prohibited them from buying any more shares in the bank.

The reason invoked, in the case of Ilie Carabulea, is the failure to meet the reputation criterion required by the Regulations of the Central Bank, in terms of integrity, as he has been sentenced to prison for offering bribes in 2012, and is currently being part of a criminal investigation by the National Anticorruption Department of Romania for offering bribes, forgery in private deeds and instigation to abuse in office, in the "Carpatica Asig" case.

For Corneliu Tănase, the measure was taken due to the fact that he was found to be acting in concert with Ilie Carabulea.

Under these circumstances, in the General Shareholder Meeting of Shareholders (AGA) scheduled for April 10/11 April, Ilie Carabulea and Corneliu Tănase will not be able to directly present their proposals, which will substantially lower their chances of having them approved.

The two shareholders have asked for the convening of the General Shareholder Meeting for the amendment of the articles of incorporation, in order to lower the number of members of the Supervisory Board (CS) from five to three and to cut the number of members of the Directorate to three from the current number of five.

Subsequently, the two have asked for the introduction in the agenda of an item that stipulates that the Directorate of BCC would present a report concerning the manner of achieving the economic and financial ratios stipulated in last year's Revenue and Expenses Budget for last year, as well as the individual contribution of every member in achieving or not achieving those ratios.

Carabulea and Tănase have warned Johan Gabriels that they have not requested, nor accepted and that they did not agree to the inclusion on the agenda of the Extraordinary General Shareholder Meeting of item five which stipulates as follows: "Empowering the Directorate of the Bank to review and identify potential development opportunities of the bank, through a merger and if such an opportunity exists to draw up the merger project which will be submitted for approval to the Extraordinary General Shareholder Meeting".

"The manner in which the new item has been worded and placed on the agenda of the Extraordinary General Shareholder Meeting, an item which we, as significant shareholders did not request, which you published on March 6th, 2014, and revised on March 10th, 2014, suggests that it was accepted by us, as significant shareholders, who hold 52.5077% of the share capital of the Bank and of the voting rights, which is totally untrue and revolting", the document sent by the two shareholders states.

The two have asked Gabriels, "for the correct information of shareholders and investors in BCC", to "urgently" make the rectifications and the notifications "necessary to straighten out this deliberate misleading of those who have an interested in the bank", and warning him that if he doesn't, he personally and on behalf of the entire directorate takes on all the risks and consequences stipulated by the law for such deeds.

So far, Banca Carpatica has not published an amended convening notice which does not include the item that the majority shareholders are referring to.

At the end of last month, the NBR announced in a meeting with the press, through the head of the Oversight Division, Nicolae Cinteză, that it intends to suspend the voting rights of a shareholder of one of the Romanian commercial banks, because he no longer meets the requirements imposed by the law to carry out the right in question.

The Central Bank official also said that there are two local banks that are reviewing the possibility of a merger, with one of them having a market share of between 1% and 5%, and the other one of less than 1%.

Nicolae Cinteză said, at the same event, that some Romanian shareholders are adamant about asking a high price for their stakes, "even though it is obvious that in the event of a problem, they wouldn't have the money available to inject into the bank".

The head of the Oversight Division of the NBR seems to have been speaking about the refusal of Ilie Carabulea to sell his stake in BCC to British private equity fund AnaCap, which tried to buy it two times.

Market sources claim that it is possible that the NBR wants the merger of Banca Carpatica with a smaller lender, in order to create a stronger one, which would be more attractive to the potential investors.

They are asking why the Central Bank overlooked the fact that Ilie Carabulea no longer met the reputation requirements back when he was sentenced to prison, but instead it took a new criminal investigation for the decision to suspend his voting rights to be made.

The NBR has conveyed many times the message that it wants the local banks to have strong shareholders that are capable of supporting them and it apparently no longer sees the businessman from Sibiu as fitting that description, which is why it is trying to quickly remove him from the shareholder structure of Banca Carpatica.

Ilie Carabulea controls 41.2898% of the shares of BCC, whereas Corneliu Tănase holds 11.2179%.