The reward of the SIFs in exchange for BCR not getting listed on the BSE

• Erste confirms talks for an alternative to the listing of BCR on the Stock Exchange

• Today, the SIFs are set to meet with the shareholders who asked them to summon their General Shareholder Meetings to discuss the listing of the bank

The listing of the largest domestic bank on the Bucharest Stock Exchange seems more remote than ever, as the officials of "Erste" said yesterday that they are discussing with the five financial investment companies (SIFs) an alternative for the listing of BCR.

"Erste Group Bank AG once again confirms the current talks with the five minority shareholders of the Romanian Commercial Bank (BCR) - SIF Banat Crişana, SIF Moldova, SIF Transilvania, SIF Muntenia and SIF Oltenia - concerning alternative solutions to the listing of BCR that would satisfy the interests of the SIFs and of Erste Group", the officials of Erste said yesterday.

The statement of the Austrians comes as, the president of SIF "Banat-Crişana" (SIF1), Ioan Cuzman, revealed on Tuesday night that the SIFs have been negotiating with Erste for about a year the liquidation of their stakes in BCR, after the heads of the SIFs had previously denied that negotiations were taking place.

"|We have received a concrete proposal from Erste for the liquidation of the stakes of BCR. We have been negotiating with them for almost a year, we have had five or six very productive meetings on this matter. We have already gone the distance, the talks are close to being complete", Ioan Cuzman said on Tuesday night.

The president of SIF2 "Moldova" presented us with a different point of view yesterday.

In his opinion the talks with "Erste" are only beginning and there are still many issues to solve before the negotiations could be completed: "I say that we have just begun, and the negotiations are far off", the president of SIF2 said, and he added: "Erste has shown its willingness to buy a block of BCR shares, saying in Vienna that it would like to acquire the shares of BCR which are in the market. The problem is that we can only negotiate with Erste within the attributions of the Board of Directors. For assets deals which exceed 20% of the total non-current assets, minus receivables, the directors of the SIFs need the approval of their shareholders".

According to Mr. Ceocea, each SIF is only allowed to sell a maximum of 2% of BCR, without having the approval of its respective shareholders.

However, if Erste were to buy 2% of the shares of BCR from each SIF, this would weaken the "power" that the SIFs hold in their relationship with the Austrians, namely the supermajority clause, which claims that any major decision needs to be made with 75% of the total votes.

"We can"t say we are < < almost there > > until we have clarified all the aspects that would be involved in liquidizing the stake in BCR", Costel Ceocea added. He also said that discussions with Erste on the subject of liquidizing the stakes of the SIFs in BCR were also held in Q1 2011, and since then, SIF2 hasn"t had any meetings with the management of the Austrian bank.

"We had talks in the first months of the year, and they entered standby before the General Shareholder Meeting of SIF2. We haven"t had any more meetings with them since then, perhaps other SIFs did", Mr. Ceocea said.

While the SIFs are looking for solutions to these problems, the officials of "Erste" claim that they are ready to make any necessary decision very quickly: "The progress of the discussions will depend on the decisions that the SIFs make from now on. Erste Group Bank will be ready to quickly make any necessary decision in response to their decisions.

For the time being, Erste Group Bank and the SIFs have agreed not to comment on the negotiations", the officials of "Erste" said.

Meanwhile, the presidents of the SIFs are trying to "assuage" the shareholders that requested the summoning of General Shareholder Meetings to discuss the listing of BCR, and they are expected to meet with them today to convince them to give up on their request.

• The alternatives negotiated by the SIFs with Erste: Direct sale, stock swap or a combined operation

The alternatives discussed with Erste include the sale of the shares owned by the SIF directly to the Austrian bank,

The direct sale to Erste of the shares owned by the SIFs in BCR, the swapping of the shares in BCR with shares issued by Erste or a combined operation, are the alternatives discussed with Erste as an alternative to the listing of BCR, but the SIFs also have the option of selling their shares in BCR to other investors.

"I see five alternatives, the listing of BCR, the sale of the blocks of shares owned by the SIFs to Erste or to a third party, the conversion of the shares of BCR into Erste stock, or a merger between BCR and Erste", said Petre Pavel Szel, the president of the Board of Directors and general manager of SAI Muntenia Invest, quoted by Mediafax.

Mr. Szel said that the merger between BCR and Erste has not been discussed at the meetings in Vienna, but in his opinion it could represent a viable solution.

Another solution that has been discussed is a stock swap supplemented by the payment of a certain amount to Erste, according to the president of the Board of Directors and General Manager of SIF Moldova (SIF2), Costel Ceocea.

"We have a problem in this case as well. What is the price that the deals will be made at, the parity which the shares will be exchanged at? We would like to have an evaluation of BCR made, by a big foreign company, a prestigious one, perhaps an investment bank or some other entity. The problem is whether Erste would also accept such an evaluation", Ceocea said. (F.A.)