Sebastian Vlădescu: The listing of BCR is a matter which only concerns the shareholders

Reporter: Does the State have any responsibility towards the listing of BCR? Can the listing of the bank on the Stock Exchange, which was stipulated in the contract by which it was sold, be considered a post-privatization condition?

Sebastian Vlădescu: Technically speaking, from the moment the Romanian state sold its last share in BCR, it no longer had any role in its decision making process, and the listing is a matter that needs to be resolved between the minority shareholders and the majority shareholder.

If the minority shareholders have agreed to the postponement of the listing there is no reason for the Romanian state to go to them and tell them that it disagrees with their decision.

The clause concerning the listing of BCR was discussed, together with the SIFs, during the negotiation for the sale of the bank, and was intended to protect minority shareholders. If, at a certain time, the minority shareholders and the majority shareholder came to the conclusion that not taking the bank public would better protect their interests, then it is their right not to have it listed. The state has no reason to force them to take BCR public; in 2005, when the privatization contract was signed, it actually didn"t want to take the bank public, and they later changed their mind.

Reporter: Considering that it brings a series of conditions for the listing of the bank, which did not exist in the contract of 2005, and it has not been signed by other minority shareholders, aside from the SIFs, is the agreement of 2009 legally valid?

Sebastian Vlădescu: If any of the minority shareholders of BCR, aside from the SIFs, were unhappy with the Agreement, they would have challenged it then.

During the negotiation of the privatization contract, the SIFs came to me and said that they wanted clauses that would protect them. I kind of went beyond my mandate, because it wasn"t my job to negotiate with the SIFs. But going with the idea that everyone should be happy - the minority shareholders, the state, and the majority shareholder - I also invited the SIFs to participate in the negotiation.

When it comes to protection, the SIFs had certain demands, they agreed to having the option of taking the bank public and they signed an Agreement then. Later, in 2009, the SIFs signed another Agreement with Erste, saying that they didn"t like the idea of listing the bank at that particular time.

Reporter: Shouldn"t the government, through the AVAS, have had a say on the postponement of the listing?

Sebastian Vlădescu: But what connection is there between the post-privatization terms that require the honoring of the commitments made to the government and those that concern the minority shareholders? What should the state do? Force the AVAS to take BCR public starting tomorrow? On what grounds? If the parties have decided not to take the company public ...

Reporter: The agreement of 2009 introduced additional conditions concerning the listing compared to those included in the contract for the privatization of BCR.

Sebastian Vlădescu: That is their business. The privatization contract only mentioned the listing of BCR. If the SIFs later signed an agreement which stipulated that the listing could only take place under specific terms, then that"s their problem. All the more reason why the state couldn"t just go and talk to each SIF individually and ask them why they made this decision.

Reporter: From what you"re saying, it sounds like the introduction of the clause concerning the listing in the contract for the privatization of BCR was a concession made to the SIFs ...

Sebastian Vlădescu: It was clearly a concession made to the SIFs.

Reporter: And that"s why there are no sanctions in the privatization contract for the case when BCR would not be listed on the stock exchange?

Sebastian Vlădescu: Nobody wanted sanctions.

Reporter: Did anybody say: let"s put in a sanction in case the contract isn"t honored?

Sebastian Vlădescu: Who would you expect to say something like that?

Reporter: The SIFs for instance ...

Sebastian Vlădescu: They didn"t say anything. Because if they did, the contract would have included a sanction for not listing the bank. But how could one include a sanction for the failure to honor a clause to take the bank public after having tied it to favorable market conditions? The market goes to hell and yet you take the company public and run the risk of losing money just to avoid being sanctioned ...

Reporter: From what you"re telling us, I understand that the introduction of the provision concerning the listing of BCR has some vulnerabilities from the start...

Sebastian Vlădescu: Technically, if the SIFs had wanted the listing of BCR in 2009, Erste would have been forced to do it. Period. Erste was required to do it. The privatization contract has also included provisions concerning the payment of dividends. For instance, if the SIFs were to announce tomorrow that they would no longer pay dividends, would the government go to them and ask them why they made that decision? The contract for the privatization of BCR has provisions intended to protect the minority shareholders. They have decided to forego those provisions, due to the evolution of the market.

Reporter: There are voices which claim that the listing of BCR is part of the post-privatization conditions, and by failing to take BCR public, this sets a precedent which would allow the buyers in any future privatization contracts to not honor the terms of those privatization contracts ...

Sebastian Vlădescu: Those opinions mistake the post-privatization commitments made to the government with the clauses intended to protect minority shareholders. In this case, nothing happened that would have any connection with the post-privatization commitments made to the government; we are talking about an Agreement between the Minority Shareholders and the Majority Shareholder, which was not imposed by anybody.

Reporter: How do you feel about the fact that a provision was in the Agreement, which gives Erste the pre-emption right for the blocks of shares owned by the SIFs?

Sebastian Vlădescu: In the privatization contract, Erste had no pre-emption right. If this was introduced in the Agreement that was signed in 2009, then good for them!

If, the SIFs had asked me in 2009 whether to sign the Agreement to postpone the listing in the form it had at the time, I would have told them to agree to have the listing take place when the market would be favorable, but I would have told them to do whatever they want on the matter of whether or not to give Erste the pre-preemption.

It is very difficult to say whether it is fair or not to grant a pre-emption right. On principle, the pre-emption right benefits the seller. Because one can say they"re going to sell their shares at a certain price, and if they aren"t offered that price, then they are no longer bound by the terms of the pre-emption right and they can sell those shares in the market at a time of their choosing. This would not place the SIFs in a losing position, rather the opposite, if they wanted to sell their shares.

Reporter: Some people accused the SIFs that they only acted in their own interest, in their relationship with BCR, and that they didn"t care about the interest of the capital market in general... The listing of the largest domestic bank on the Stock Exchange could have really meant something for the capital market ...

Sebastian Vlădescu: How would I know if the SIFs want to have a better developed capital market or a less developed one? The way the Romanian capital market is developing and the way it works, I don"t feel like the SIFs are big fans of a big, transparent, solid capital market.