THE 2015-2018 STRATEGY FOR ROMANIA The EBRD wants to grow the stock market and the private sector

The Board of Directors of the European Bank for Reconstruction and Development (the EBRD) has approved the new strategy for Romania, which will guide the investments of the bank in the country for the next four years.

The local priorities of the EBRD, between 2015 and 2018, are extending access to financing by stimulating lending and developing the capital markets, by reducing the regional disparities and stimulating inclusion through the commercialized infrastructure, as well as increasing competitiveness in the private sector.

Matteo Patrone, the head of the EBRD for Romania, said: "We want to stimulate the growth of the private sector in Romania, by extending access to funding, with an emphasis on the development of the stock market. With the economy recovering, the conditions are adequate for companies to increase their competitiveness through balanced financing structures and improved management practices. The EBRD will also work on reducing the regional disparities by financing the essential infrastructure, which would promote economic inclusion. We will combine investments with the support for reforms, while also improving corporate governance in state owned companies".

According to the quoted source, the development of the local capital market is a strategic pillar for the EBRD, but "if there are no IPOs (ed. note: initial public offerings), there isn't much we can do".

Matteo Patrone explained: "We invest depending on the offer and the market needs. IPOs are a target for us, but we do not rule out the possibility of some secondary public offerings, even if they have behind them interesting projects and business plans that justify them".

The EBRD holds stakes in several companies listed on the Bucharest Stock Exchange (BSE), including Banca Transilvania (TLV) - 14.3% and in Electrica (EL) - 8.6% of the shares. Mr. Patrone said that currently, the EBRD has no plans to reduce its existing holdings on the BSE, but that he doesn't exclude this possibility in the future, if reasonable justifications to do so appear.

The head of EBRD in Romania said: "The EBRD can invest any amount comprised between 1 and 100 million Euros. The issue is not one of size, it is a matter of the policy of the institution and the "story" behind the company that gets listed. In general, the decision of the investment depends on the transitional impact and the signal that we would send to the market by being there".

• 592 million Euros - the EBRD investments in Romania in 2014

The official of the EBRD did not mention the total amount which the bank will allocate to the investments in Romania, in the coming four years, with this amount to be decided by the Board of the institution that it represents. Still, Matteo Patrone claims that the local investments will be below those of last year, somewhere under 592 million Euros.

"We are still defining how much we want to invest, in the coming years, in the regions that we are present in. We will try to maintain or to slightly increase the level of investments conducted during the previous country strategy, but this will depend on what the bank decides when it comes to the investments in Romania", Mr. Patrone further said.

During the previous four years, the investments of the EBRD in Romania amounted to approximately 1.5 billion Euros, in 75 projects, as the institution focuses on developing the stock market, the development of infrastructure, of the renewable energy segment and increasing the competitiveness of the private sector.

The head of the EBRD in Romania has reminded about the visit that prime-minister Victor Ponta, Transports Minister Iulian Matache, and Finance minister Eugen Teodorovici made two weeks ago at the headquarters of the EBRD in London to discuss collaboration on future projects.

Matteo Patrone explained: "We will not have an allocation of money for a specific region. We are looking at Romania as a whole. We are targeting the infrastructure that would tie some regions to others, but we are not focusing on certain regions. We have a list of possible investments in Romania, but we are working on shrinking it and prioritizing the projects. During the visit that prime-minister Ponta made in London, several projects were discussed, which we are currently reviewing".

Also, Mr. Patrone mentioned that the banking institution will continue to invest equally in Romania's economic sector: "We will continue to maintain a sufficiently balanced portfolio when it comes to the distribution across sectors.

The EBRD estimates that Romania's economy will grow approximately 3% in 2015 and 3.2% in 2016, ranking among the countries with the highest economic growth in South-Eastern Europe. So far, the bank has invested over 7 billion Euros in Romania and has raised more than 14 billion Euros from other financing sources in all the economic sectors of the economy.