The BSE without Cionga

The tensions within the BSE which came out through the dismissal of Chairman Victor Cionga, could affect the perception of our stock market and could even endanger the schedule of public listings which was agreed with the IMF, and which was already late.

On Thursday night, the Board of the Bucharest Stock Exchange has decided to end the term of CEO Victor Cionga, after assessing his first six months of activity.

Gabriel Dumitraşcu, the head of the Office for the State's Interests and Industrial Privatization (OPSPI), told us that dismissing Victor Cionga wasn't good, given the context of the listings of the state owned companies in the energy sector.

"I hope that the announced listing schedule will not be affected. I will review the situation and the impact together with the intermediaries and the consultants of the listings", he said.

• Remus Vulpescu: "Perhaps the Romanian state should become a shareholder in a stock exchange as well, just like other countries"

Remus Vulpescu, the receiver of Hidroelectrica and former head of the OPSPI, does not believe that the dismissal of Victor Cionga should be a cause for concern over the privatization schedule. He said: "The administrative changes should not affect the way the stock exchanges operate in their relationship with issuers and investors. The dysfunctionalities of the stock exchanges, big or small, can't be blamed on the state. The reinvigoration of the Romanian stock exchanges, can't be made the responsibility of the state alone, either. There are success examples in Central and Eastern Europe, where the governments have consolidated the stock exchanges, and the stock market has developed better than in Romania".

"Perhaps the Romanian state should become a shareholder in a stock exchange as well, just like other countries. Perhaps at one time, we will have just one stock exchange in Romania. Perhaps we will succeed in recouping the delay in the development of the stock market. These are important matters which require cooperation between all the parties involved in the stock market".

Remus Vulpescu talks about cooperation, about an ideal situation, but the reality "in the field" is totally opposite.

The Board of the Stock Exchange is divided, as is the broker community, and the supervisor of the market, the CNVM, has its neck on the chopping block, awaiting the creation of the Financial Supervision Authority, through its merger with the Insurance Oversight Commission (CSA) and the Commission for the Supervision of the Private Pension System (CSSPP).

• Flawed communication, at the BSE

The reality is that the BSE has proven incapable of a communication strategy which would counteract the potentially negative effects of the dismissal of Victor Cionga. The dismissal has been treated simply, through a press release displayed on the website of the Bucharest Stock Exchange, from where we find that the BSE has blamed Cionga that his restructuring of the company was not fast enough.

No assurance that "Everything will be alright!"

Except from BSE president Lucian Anghel. He said: "The Bucharest Stock Exchange is an entity that works, and the market will not be affected by the dismissal of the CEO of the BSE. Victor Cionga will ensure the transition until the finding of a new CEO, so there will be no reasons for concern when it comes to the processing of the conducted offers".

Adrian Lupşan, the vice-president of the BSE, who has publicly expressed his support for Victor Cionga, did not have any clear answer when he was asked about the measures taken by the BSE to prevent the dismissal of the CEO from affecting the investors' perception or the scheduled listings of state-owned companies.

"If the directors haven't been capable to take these risks into accountm then it will be up to the shareholders to decide. They remain the supreme institution and they are the ones who will decide if they want the capital market to grow", he said.

While Lupşan publicly admitted that he voted against the dismissal of Victor Cionga, the president of the BSE hinted that he voted the same way.

"I personally would have wanted to give him a little more time to implement the restructuring program which he had begun ", Mr. Anghel said on Friday.

However, most of the members of the Board of directors (five out of nine) disagreed, and this time gave agreed with Dan Paul, vice-president of the BSE, who traditionally has been an opponent of Anghel.

It would seem that the members of the Board of Directors have received from Dan Paul a note concerning the expenses made by the General Manager. The note however, was not taken into consideration, and the Board reviewed strictly the activity of Cionga, according to sources close to the situation. Providing information about the expenses was left to the auditors.

• Swiss Capital has changed sides

In spite of this, Robert Cosmin Pană (of brokerage firm Swiss Capital) and Narcisa Oprea (lawyer at "Schoenherr şi Asociaţii") have joined the "Paul" group, voting in favor of dismissing Cionga, together with Stere Farmache and Octavian Molnar.

The meeting of the Board of Directors saw sparks fly, as it lasted until midnight, but at the end, the board of the Exchange had to agree on how to disseminate the information in the market.

On Friday, Victor Cionga sent a press release, in which he said that he has not received any clear explanation about the major goals which he failed to meet during his six months of activity.

Radu Furnică, the "head-hunter" who has proposed Victor Cionga for the position of CEO seems a bit surprised as well.

He said: "I can't comment (ed. note: the dismissal of Victor Cionga). I will need to talk to the board of the BSE and to Mr. Cionga, so I can understand why the management of the Bucharest Stock Exchange has taken this decision. I have every intention to continue working with the BSE so we can find a new CEO, but all the details of a possible cooperation will be established together".

Victor Cionga has drawn heavy criticism, especially after proposing a new pricing policy at the BSE, by introducing a new fixed commission for brokerage firms, of 3,500 lei/month.

The Association of Brokers, whose president is Dan Paul, thought that this commission would favor bigger brokers over the smaller ones.

Other complaints in the market, as well as among the employees of the BSE, concern the fact that Cionga has apparently hired advisors, through personnel leasing, which means that formally, the wage expenses had not increased, on the balance sheet (a bureaucratic trick).

• Elections at the SIFs, essential for the negotiations of the BSE

The dismissal of Cionga seems to hint that an overthrow of the Board of Directors may be attempted as well, as there are signals that some shareholders may attempt something along those lines. Preparations are being made for the General Shareholder Meeting of April 24th/25th, but some feel that a more favorable moment would be this year's autumn.

The reason for this is that, in order to have a chance of succeeding, the disgruntled brokers will need to attempt alliances with the SIFs, which are important shareholders of the BSE.

For now, however, they are busy with their own elections, and it is with the new bosses that those negotiations will need to take place.