SIF"s Could Set Up Provisions By Year-End

The abrupt decline of the shares in the portfolios of the five financial investment firms (SIFs) listed on the Bucharest Stock Exchange (BSE) could prompt the SIFs to set up provisions by the year-end, analysts estimate. This would have a significant impact on the year 2008 profit and send out an alarm message to investors. Mihai Fercala, President of SIF Transilvania (BVB:SIF3) told Bursa: "Normally, we should set up provisions in order to play prudently. We have not made any decision yet because we should wait to see what is going to happen until the year-end." He explained that the SIFs derived their profit from the dividends received from the companies in which they held shares and also from speculative sales on the stock exchange. However, in the second half of the year, there have been no good opportunities to sell important packages because of the general decline of BVB. "From the beginning, the budget for 2008 was smaller than the one for 2007," Fercala added. "The nine-month results of SIF3 were influenced by the impossibility to make profitable transactions on BVB in the second half," Fercala said. However, SIF Muntenia managed to report a net profit of 113.93 million RON, nearly 80% more than in the first three quarters of 2007. Paul Brendea, an analyst with Prime Transaction, explained: "Most of the profit came from the exit of SIF4 from Upetrom 1 Mai - Ploiesti for approximately 60 million RON. There were also some speculations with Erste shares and investments in foreign financial instruments."

SIF Transilvania Reports Declining Results

SIF Transilvania reported a net profit of 72.64 million RON for the first nine months of the year, down by 30.31% y/y. Mihai Fercala, President of SIF3, told Bursa it was possible that SIF Transilvania may only perform up to two transactions before the year-end. For the time being, a public offering is in place for Comcereal - Constanta, in which SIF3 holds 40.51%. "We are currently discussing with the shareholders of another company regarding a possible sale, but not much will happen until the year-end," Fercala said.