OCTAVIAN MOLNAR, BSE BOARD MEMBER: "The merger with Sibiu will not happen!"

Confidence in the success of the BSE-Sibex merger is very low. Even some of the members of the Board of the BSE said in an unequivocal manner, three days before the General Shareholder Meeting when the merger was supposed to be discussed, that it would not happen.

Octavian Molnar, a member on the board of directors of the BSE, said: "Even though the shareholders of the Sibiu Exchange will vote in favor of the merger with the BSE, there won"t be any kind of union, because it is not wanted in Sibiu".

The statement of Mr. Molnar is unsettling, as it comes just three days prior the General Shareholder Meetings of the of the BSE and of Sibex, where the shareholders of the two companies are being asked to vote on the principle of the merger between the two exchanges. Octavian Molnar is also the first member of the management of the Bucharest Stock Exchange to be so blunt about the possibility of the merger not going through.

A little earlier, Tedor Ancuţa, the president and CEO of the Sibiu Exchange, had assured that the shareholders of Sibiu will vote in favor of the merger, and said that he was negotiating with Daniel Ţepeş and Cristian Sima on the matter.

"The shareholders of Sibiu may approve the principle of the merger, but approving and doing are two very different things", Octavian Molnar said, who added: "I wouldn"t be surprised if the people of Sibiu asked for a parity of 1 to 1, or 1 to 2 (between the shares of BSE and of SBX), which is something that the people in Bucharest will never accept. I want the merger, but I can"t do it alone. The BSE also wants the merger, and will maintain this stance in the negotiations in Sibiu, but it would seem that in Sibiu they don"t want it".

Even though the resumption of the talks on the merger was announced with great fanfare in the beginning of 2011, it didn"t take long for frictions to appear between the management of the two exchanges.

The management of Sibex changed its mind on the decision to hold the General Shareholder Meeting on the merger in Braşov, choosing instead to remain in Sibiu, even though it seemed at first that it had agreed with the BSE on holding the two General Shareholder Meetings simultaneously.

The decision of Sibex was made in anger, after the decision of the BSE to return to its member brokerages 90% of the interest earned by the Bucharest Clearing House on the amounts that brokerages are required to submit as collateral.

Another negative signal came about three weeks ago, when Patrick L. Young, the Irishman proposed by Teodor Ancuţa as his successor to the executive management of Sibex, said that a possible merger between the two exchanges would not be beneficial for the domestic capital at this moment. Mr. Young expressed his opinion that the Sibiu Exchange could be worth about 50 million Euros in about four years. Its current capitalization is about 13.8 million Euros.

At around the same time, Teodor Ancuţa reiterated his support of the merger of the two exchanges, but he stressed that the matter wouldn"t have even been brought up if the financial results of Sibex had been better.

Last year, the Sibiu exchange reported a profit of 237,723 lei, for a turnover of about 2 million lei. For comparison, in 2009, Sibex had a profit of 1.3 million lei, for a turnover of 1.93 million lei.

Last year, the BSE reported a net profit of 5.7 million lei, for a turnover of 13 million lei.