Business Review Issue 33, 2009

Household consumers onlymake up 10 percent ofwatercooler companies’portfolios, but their strategyis to focus more on thissegment, as corporatespending has dried up

See page 14-15

Household consumers onlymake up 10 percent ofwatercooler companies’portfolios, but their strategyis to focus more on thissegment, as corporatespending has dried up

See page 14-15

L I N K SThe local telecom regulator is testing

the ground for a new 3G licence and

looking at the available resources, such

as radio spectrum

S e e page 12

EXECUTIVE BEATGeneral manager Misu Negritoiu re-

flects on ING Bank’s 15 years on the

market and outlines the long-standing

lender’s new strategy

S e e page 11

T A L E N TStefan Gheorghiu, the founder of

Tegron Consulting, reveals the blunders

he witnessed that caused him to fall out

of love with the real estate business

S e e page 13

TAPPING INTO THEHOUSEHOLD MARKET

TAPPING INTO THEHOUSEHOLD MARKET

B R P UT S TH E S P O TL I G H T O N T H E G E R M A N F I R M S M A K I N G A M A R K L O C A L L Y , S E E P AG E S 1 8 - 2 1

BUSINESS REVIEWROMANIA’S PREMIERE BUSINESS WEEKLY SEPTEMBER 14 - 20, 2009 / VOLUME 14, NUMBER 32

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BUSINESS REVIEW / September 21 - 27, 2009 3

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P u b l i s h e rBILL AVERY

E d i t o r - i n - C h i e fSIMONA FODOR

Deputy Editor-in-ChiefCORINA S~CEANU

Senior JournalistsDANA CIURARUANDA DRAGAN OTILIA HARAGA

Copy EditorDEBBIE STOWE

C o n t r i b u t o rMICHAEL BARCLAY

R e s e a r c hSIMONA BAZAVAN

P h o t o g r a p h e rLAURENTIU OBAE

L a y o u tB E A T R I C E G H E O R G H I U

Executive DirectorGEORGE MOISE

Sales & Events DirectorOANA MOLODOI Marketing Manager

ADINA MILEASales Consultant

GIUSEPPINA BURLUIAdvertising Sales IULIAN BABEANU

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FREDERIC VIGROUXResearch & SubscriptionALEXANDRA TOADER

P r o d u c t i o nDAN MITROI Distribution

EUGEN MU{AT

SEPTEMBER 21 - 27, 2009 / VOLUME 14, NUMBER 33

Up in smokeThe fact that Romanians spent EUR 2 billion oncigarettes in 2008 (Week in numbers, issue 32) willnot surprise anyone who dines out in Bucharest, asI do on my regular trips to the city. The recent lawthat obliged smaller outlets to be either entirelysmoking or non-smoking, while probably well in-tentioned, only made things worse, as many placesabolished the small smoke-free sections they had.On a recent trip to London, where smoking is nowbanned in enclosed public spaces, the situationseemed to suit both smokers (many of whom wouldlike to give up, or at least smoke less) and non-smokers. How about starting a campaign for clean-er air in Bucharest?

Rebecca Scott, Stockton, England

C u l t u re shockI can certainly empathize with the experience ofVolker Moser upon his arrival in the country(B u c h a rest Angels extend anxious expats a helpinghand, issue 32). Stray dogs, chaotic driving, aggres-sive passers-by, dishonest taxi drivers and frustrat-ing bureaucracy were the main problems I encoun-tered in Bucharest. It took a while before I could seeit as part of the city’s charm!

David Martin, Baneasa, Buchare s t

Park lifeJogging in Izvor Park earlier this month, I was dis-appointed to see the state of the place following therecent Madonna concert and Tu b o rg festival. It isone thing to have to dodge round big trucks andf e n c e d - o ff sections in the run-up to an event, quiteanother if the damage is not repaired. While it’sgreat to welcome big stars to Bucharest, Madonnais here for one night – we live here. Izvor Park is amuch loved green space and I hope it will be re-stored to its former glory.

Catalina Mihai, Buchare s t

Banging onYour brief on Romanians’ love of DIY (Staying inis the new going out for Romanians, issue 32) makesense. This must be why in my apartment I hearnon-stop banging, sawing and drilling from myn e i g h b o r s !

Bogdan Antonescu, Buchare s t

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CAUTIOUS OPTIMISM?REPEAT AFTER ME…When will the Romanian economy turn around?

Not until well into 2010 according to our report

last week. That also seemed to be the general feel-

ing at our Advertising and Media seminar which

we organized at the Intercontinental before our

Business Mixer [see pages 22-23]. As a follow up

to what I wrote last week about the decline in ad-

vertising revenues this year, Peter Jansen men-

tioned the industry rule of thumb gearing ratio of

1:3, where a 1 percent change in a country’s GDP

results in a 3 percent change in the advertising

business – more for developing countries. So, if

the Romanian economy is 8 percent down this

y e a r, that indicates at least a 24 percent drop in ad-

vertising volume. Maria Tudor of Zenith Media

implied the decline this year was more then 30 per-

cent. Bright spots in the industry include the PR

sector and digital media development.

Andreea Rosca of Realitatea/Catavencu described

the challenges of knowing your audience and what

they want. I spoke about our efforts to reach out to

our premium readership though our magazine, net-

working events and our new website – which is

still under construction. Even the redesign of this

page is something we hope will encourage our

readers to connect with us on multiple levels –

from emailing us your opinions to following the

news on twitter. We want to continue to serve the

business community by offering various platforms

for discussion.

Perusing the international business media there are

signs the recession in the US is over, and we are in

for a long, slow recovery. Construction permits are

up, along with the stock market, and jobless claims

are down. There seems to be a sense of cautious

optimism among economists, although that is not

really helping the person on the street yet. If the

impact in Romania of a turnaround in the US

comes, say, after six months, then it makes intu-

itive sense that the local economy might get on

track again by next spring. But, just because peo-

ple wish for it, won’t make it happen. Right now,

most company chiefs are still throwing up their

hands because the market won’t permit any fore-

casts or planning that makes sense, which still

makes 2009 a complete wash-out.

Bill Avery

Publisher

BRIEFSEXCHANGE RATE ‘TOREMAIN HIGH’é The exchange rate will stay atRON 4.2-4.3/EUR until the endof 2009, provided inflation doesnot slip, said the executive man-ager of Alpha Bank, SergiuOprescu. He added that the localcurrency was likely to rise.

OPIC LENDS VERIDA CREDITUSD 30 MILLION é Non-banking institution VeridaCredit, specialized in mortgagesand residential housing loans, hasrecently signed a USD 30 millionborrowing agreement with theAmerican government agencyOverseas Private InvestmentCorporation (OPIC). The transac-tion is the first OPIC investment onthe local mortgage market. Thefinancing will be used by VeridaCredit to fund mortgages.

GEBRUDER WEISS CHUGSINTO RAILWAY FREIGHTSEGMENT IN ROMANIAé Austrian logistics and transportcompany Gebruder Weiss hasentered the railway market inRomania, a move which reflectsthe maturity of its operations inthe country, the company hasannounced. GW Rail cargo, thesubsidiary which will be active inRomania, transported 870,000tonnes of merchandise in Austrialast year. GW Romania employs180 people and has invested EUR15 million in 2008 and 20009 indeveloping its logistics terminal inBucharest. The firm forecasts EUR15 million in turnover for thisyear in Romania.

N E W S

BUSINESS REVIEW / September 21 - 27, 20094

Telefonica has opened an officeon the Romanian market, the Spanishtelecom operator announced lastweek. The company has set up opera-tional offices in 15 European coun-tries, including Romania, “to further

enhance the integrated telecommuni-cations services it offers multinationalcorporations across the region,” ac-cording to officials.

“ Te l e f o n i c a ’s global capabilitiesallow us to quickly and efficiently de-

liver both fixed and mobile solutionsto multinational corporations any-where in the world. The new officesand network infrastructure being de-ployed in Europe, supported by a newonline experience and enhanced prod-ucts and services, reinforce our com-mitment to this strategically importantmarket segment. Telefonica is makinggood progress and is executing in linewith the strategy to expand its pres-ence and services to corporate cus-tomers already announced in Decem-ber 2008,” said Matthew Key, chair-man and CEO of Telefonica Europe.

The new offices are in France,Belgium, Greece, Italy, Netherlands,Portugal, Sweden, Denmark, Estonia,Poland, Hungary, Switzerland, Aus-tria, Romania and Bulgaria, whereTelefonica had no presence up untilnow.

Otilia Haraga

Telefonica enters the Romanian market

Alexander Adamescu, the son ofbusinessman Dan Adamescu, share-holder of 17.54 percent of FlamingoInternational, has become chairmanof the administration board of theIT&C retailer. He replaces DragosSimion, who stepped down from theposition.

“The alignment of the sharehold-e r s ’ interests over the re-launch hasbeen my principal objective over thelast nine months. I believe this objec-tive has been fulfilled and the compa-ny has access to new financial re-sources, both on the capital market

and at the banks,” said Simion. Hewill remain a member of the adminis-tration board but said the new devel-opment cycle of the company shouldbegin with a new president.

This move follows the exit ofQ V T Fund, which had a participationof 22 percent in the company and re-tired from its shareholding structure.Q V T had previously requested thedissolution of Flamingo Internationaland opposed the decision of theS h a r e h o l d e r s ’ General Meeting to in-ject new capital into the companythrough a bond issuance.

Q V T sold its participation to a for-eign fund which entered its sharehold-ing structure and will support thec o m p a n y ’s re-launch strategy. T h etransaction amounted to EUR 1.2 mil-lion. QVT also announced it woulddrop all legal action against Flamingo.

The main shareholder in Flamin-go International is Dragos Cinca, with25.2 percent of the capital. Business-man Dan Adamescu, through two ofhis companies Nova Trade and A s t r a ,has 17.54 percent of shares. A l e x a n-dru Ion Tiriac holds 5.12 percent.

Otilia Haraga

Alexander Adamescu becomes chairman of theFlamingo International administration board

Spanish Telefonica is the last telecom giant to move into the Romanian market

BRIEFSIKEA UPS ROMANIANSALES BY 7 PERCENTé IKEA posted EUR 95 million inlocal sales in the financial yearfrom September 2008, accordingto the firm. Its sales in local cur-rency are up 7 percent. In the firstsix months of the period, salesgrew by 20 percent, whilebetween March and August theydropped 6 percent. The volatilityof the EUR/RON exchange rateaffected the company, as most ofits products in Romania areimported. The firm recently fore-cast a sales increase of 12 per-cent on last year.

HEINEKEN CLOSES MALTPRODUCTION UNITSé Brewer Heineken Romania willclose its malt production units inHateg, Craiova and MiercureaCiuc in October and lay off 61employees. The firm has given upmalt production due to the costsof high energy and water con-sumption. It will buy malt fromother suppliers instead.


Carrefour has launched its sec-ond private label for Romania, un-der the Carrefour brand, and is us-ing several local companies as sup-pliers of these products.

Out of a total of 1,200 productsunder the label, 500 are produced

Carrefour works with 40 localproducers on private label

Cheaper private label products are in demand

locally by 40 companies, includingReinert Romania, Orkla Foods, Vas-car and Farmec Cluj-Napoca.

Private, or own brand, labels,which are usually cheaper products,have started to sell better than moreexpensive ones during the currenteconomically difficult times.

“We wanted to launch the Car-refour private label now, because ofthe crisis, but also because we had to reach a certain number of stores so that the sold volumemakes it profitable for the producers,” said Andreea Mihai,marketing manager for Carrefour inRomania.

The French hypermarket firm al-so sells products in Romania underthe No.1 private label.

Private labels account only foraround 5 percent of retailers’ salesin Romania, compared with up to 30 percent in Western European coun-tries.

Corina Saceanu

N E W S

GM Matanya Schwartzleaves Strauss Romania

Matanya Schwartz has steppeddown from his position of generalmanager of Strauss Romania. Hisdeparture was based on mutualagreement with the management ofthe Strauss Group.

“In the near future I will bespending two months at HarvardUniversity Business School under-taking an advanced managementprogram and later I will turn to oth-er professional challenges,” saidSchwartz.

The executive took over themanagement of the Strauss Balkansdivision two years ago, having beendirectly involved in the process ofrebranding and repositioning thecompany. The re-branding includeda name change from Elite to StraussRomania.

The management of the StraussGroup has named financial managerAvraham Ben Baruch as interimGM.

Otilia Haraga

N E W S


The local pharmaceutical marketsaw a 15.3 percent drop in sales vol-ume in the third quarter of the year,while sales in euro were down 8.8percent to EUR 450 million, accord-ing to pharma market research firmCegedim. The overall market willstabilize at the end of this year, al-though sales have been in declinesince last year. Drug sales will dropby 3.9 percent by year-end com-pared to last year, when calculated

in the European currency. Sales inthe Romanian currency will see abigger fall, of 10.8 percent, al-though the third and fourth quartersof this year will see a slight come-back in sold volumes.

“2010 will continue to a certainextent the decline of 2009. Purchas-ing power will not improve and the public resources and the waythey are administrated don’t encour-age market recovery,” said PetruCraciun, head of Cegedim Roma-nia.

The pharma market has beenused to seeing two-digit increase inrecent years. It is expected to fallback to EUR 1.73 billion this year,after exceeding EUR 1.8 billion lastyear. In April and May, sales ofdrugs to hospitals generated EUR54 million.

Hospital sales have in fact seen agreater decrease, 15.6 percent in thesecond quarter of the year, com-pared to the 7.8 percent drop in re-tail sales through chains of pharma-cies.

Corina Saceanu

Oil and gas company Petrom has

announced its first oil production

from the recently drilled offshore

wells Delta 6 and Lebada Vest 04,

located in the offshore block Histria

XVIII in the Black Sea.

“The production start-up at the

Delta field in the second half of this

year is a great achievement, given

the technical difficulties we experi-

enced while drilling Delta 6. As the

concept of extended reach drilling

has proved to be successful, Delta 6

might become our most valuable

well in Romania,” said Johann

Pleininger, Petrom executive board

member responsible for exploration

and production.

Petrom currently operates two

o ffshore perimeters (Istria XVIII

and Neptun XIX), which cover an

area of 13,880 square kilometers.

The present-day output amounts to

about 18 percent of the firm’s pro-

duction in Romania.

Petrom exploits oil and gas re-

serves estimated at 0.9 billion bar-

rels of oil equivalent, has a maxi-

mum annual capacity of eight mil-

lion tonnes and about 550 fuel dis-

tribution stations in Romania. Aus-

trian oil and gas company OMV

owns 51.01 percent of Petrom

shares.

Dana Ciuraru

Petrom startsproduction at twonew offshore wells

A bitter pill to swallow: sales are tipped to fall

Petrom operates two offshore perimeters

The European Commission (EC)has started an in-depth investigationinto planned Romanian state sup-port for chemical producer OltchimRamnicu Valcea.

The move was prompted by theRomanian government’s intentionto provide Oltchim with a EUR 135million debt-to-equity swap and aEUR 339.2 million guarantee, cov-ering 80 percent of a commercialloan. Also under EC scrutiny is theconversion of the company’s publicdebt into shares worth approximate-ly EUR 135 million.

The commission, the bloc’s reg-

ulatory arm, suspects Romania’s aidto Oltchim would not have been of-fered by a private-sector lender orinvestor.

“The commission has to verifyif the measures proposed in theOltchim case constitute state aidand, if so, whether these measureswould raise a competition issue,”said Neelie Kroes, competitioncommissioner.

European Union rules prohibitmost state subsidies to business, in-cluding loans provided at below-market rates.

Dana Ciuraru

EC investigates Oltchim over ‘state aid’

What is KAI Romania’s presenceon the local market?

In spring this year we created a lo-cal subsidiary in Romania, with theaim of entering all market segments byestablishing partnerships both with dis-tributors and retailers. Currently, ourproducts are sold in Baumax, Bricos-tore and Praktiker. We also have astrong national, regional and local pres-ence, thanks to contracts signed withPremierCom, Delta Distribution andsome other regional and local distribu-tors. We aim to become the leadingsupplier of ceramic tiles in Romania,given that we act as a local producer,even though the two factories are locat-ed in Bulgaria, a EUR 40 million in-vestment.

What are your targets on the shortand medium term?

Our expectations are to reach a 15percent market share and betweenEUR 8 to 10 million turnover, by theend of the year. For next year, we aimto gain a 25 percent market share,which should put us in the lead or atleast thereabouts. I believe that the ex-pansion of the company will be signif-icant, quarter to quarter. We can pro-duce up to 10 different models a dayand more that 15 different sizes of tiles.

What new things are you bringingon the local ceramics market?

At the moment, our designs are de-veloped in collaboration with Spanishand Italian designers, who have thenecessary know-how. Our aim is tostart working with well established andexperienced product designers and ar-chitects from Romania and to helpthem learn about designing ceramictiles. The first project will be developedin partnership with an architecture of-fice with operations here which wehave already selected.

Dana Ciuraru

3 Q

country manager KAIRomania

Pharma sales to see 10.8 percent fall inRomanian currency by year-end

Catalin Rotaru

The European Commission is set to investigate the state’s planned help for chemical firm Oltchim

N E W S


Week i n

N U M B E R S

the local construction equipmentmarket has dropped by 90 per-cent this year from the last,according to the Association ofConstruction Materials Producers

New car sales in Romania havefallen by 53.5 percent in the firsteight months of the year, saysthe Association of Car Importersand Producers (APIA)

90

53.5

The budget deficit stood at 4.4percent in the first eight monthsof the year, according to theFinance Ministry

4.4

Banca Italo Romena has recentlylaunched a newlyweds’ loan, as an alter-native to the First Home program. T h ebank lends up to EUR 150,000 to first-time buyers. The loan’s interest dependson its duration, varying from 4.32 per-cent a year for a 10-year loan to 5.32 per-cent for a 30-year one.

“ With its newlyweds’ loan BancaItalo Romena offers an alternative to theFirst Home credit, and lends under- 3 5 smoney to buy their first home,” saidbank officials. Under the borrowingterms, the newlyweds’ loan does not re-quire a deposit, with 100 percent of thep r o p e r t y ’s value being financed by thel e n d e r.

“The new product comes in additionto Creditul Imobiliar, which other clientsmay access. Through Creditul Imobiliarcustomers can borrow up to EUR300,000 for a maximum period of 25years,” said the general manager of Ban-ca Italo Romena, Antonio Bianchin.

Anda Dragan

Banca ItaloRomena launchesnewlyweds’ credit

Kaspersky Romania has revised itsmarket share down by 5 percent in thecontext of an IT security solutionsmarket that did not deliver on growthexpectations. The local market willgrow by only 10 percent this year toEUR 10 million, from 2008, accordingto Teodor Cimpoesu, general managerof Kaspersky Lab for Romania andBulgaria.

At the beginning of the year, mar-ket intelligence firm IDC predicted theindustry would increase by 10-20 per-

cent this year to EUR 10-12 million. The first semester was rather slow.

According to Cimpoesu, the businesssegment grew this year, up 50-60 per-cent compared to the same period oflast year. However, the company hasnot managed to reach its target, that ofobtaining 60 percent of sales from thebusiness segment.

A d d i t i o n a l l y, the retail segmentwas also slow in the first semester, andthe IT security provider had to reviseits market share downwards, from 30to 25 percent. Currently, the residen-tial and business segments make upequal weight in the total sales.

The company has projects in thepublic sector for clients such as cityhalls and the Romanian Road A u t h o r-i t y, and a contract to deliver 13,000 li-censes to the Ministry of Justice.

Kaspersky launched last weekKaspersky Internet Security 2010 and Kaspersky A n t i - Virus 2010, anew generation of solutions to protectresidential customers against ITthreats.

Otilia Haraga

Kaspersky Lab revises marketshare downward by 5 percent

Teodor Cimpoesu, GM of Kaspersky Romania

W H O ’ S N E W S / C A L E N D A R


W H O ’ S N E W SSO N I A NA S T A S E is the new general

manager of HowardJohnson GrandPlaza Hotel. A for-mer senior associateat Trend Hospitalityand previously di-

rector of sales and marketing at thesame hotel, Nastase has 12 yearsof experience in the hospitalityfield. She is a graduate of the Ro-manian-Canadian MBA and has been trained at international hotel chains such as Hilton Inter-national and Wyndham HotelGroup.

SA G I T TZ U R LA H A V is the new chief op-erating officer ofMcCann EricksonRomania as of mid-S e p t e m b e r. Shejoined the team af-ter four years as

marketing vice-president at TnuvaRomania. She began her career 12years ago at Tnuva Israel in themarketing department where sheheld various positions.

AD R I A N A IO N E S C U has been appointedmarketing directorat Tnuva Romania,in charge of devel-oping and imple-menting brandstrategies and annu-

al marketing plans. She has had acareer in marketing and strategicand operational management. Pre-viously, she worked for Procter&Gamble for 13 years.

CR I S T I A N PO P A was appointed salesdirector at Tnuva Romania, wherehe will be in charge of the salesand distribution departments. Hehas 17 years of experience in salesat multinational companies such asJTI, Stimorol, P&G and InBev. In1996, Popa joined the sales teamof Procter Gamble as key accountm a n a g e r. Over the next sevenyears, he held various positions atP&G. Before joining Tnuva, be-tween 2003 and 2009 he was salesmanager at InBev Romania, part ofInBev Group.

NA R C I S A OP R E A was promoted to part-

ner in the Bucharest office ofSchoenherr law firm. She joinedthe team in May 2008 as coordina-tor of the capital market depart-ment. Since then, she has been in-volved in the listing of Transelec-trica, the founding of STK Finan-cial, the issuance of EurobondsYioula Glasswork, the Alumil list-ing and the initial public offeringof Transgaz. This year, she was ap-pointed member of the commis-sion for selecting the administratorof the Property Fund. Until 2002she coordinated the judicial depart-ment of the Bucharest Stock Ex-change.

VA L E N T I N VO I N E S C U has joined NND-K P ’s banking andfinance departmentas a senior associ-ate. He advisesclients on a widerange of financing

transactions, with a focus on proj-ect finance. He also provides legaladvice in connection with restruc-turing and insolvency matters.Voinescu graduated from the University of Bucharest LawSchool.

SI M O N A IA C O B has joined NNDKP’smergers & acquisi-tions department asan associate. Sheprovides legal assis-tance in connectionwith mergers and

acquisitions, corporate law andcommercial contracts. Iacob grad-uated from the University ofBucharest Law School.

MA D A L I N A IV A N E S C U has joined NND-KP’s Dispute Reso-lution department asan associate. Sherepresents clients inrelation to variouslitigation matters

such as administrative and civil,commercial law, as well as intel-lectual property matters. Ivanescugraduated from the University ofBucharest Law School and holds amaster’s degree in Business Lawfrom Nicolae Titulescu Universityin Bucharest.

Business Review welcomes information for Who’s News from readers.Submissions will be edited for length and clarity. Feel free to contact us at [email protected]

EVENTS, BUSINESS AND POLITICAL AGENDASEPTEMBER 23é Business Review organizes German Business Forum at Intercontinental

Hotel.

SEPTEMBER 24é 9.00 – IBM organizes IBM Smart Service Oriented Architecture Day at

Radisson Hotel.

SEPTEMBER 28é 19.00 – Groupama organizes launch event at the Romanian Atheneum.

SEPTEMBER 30é Business Review organizes Italian Business Forum at Intercontinental

Hotel.

OCTOBER 7é Business Review organizes Austrian Business Forum at Intercontinental

Hotel.

OCTOBER 13é 9.00 – Pierre Audoin organizes conference on software business solu-

tions.

NOVEMBER 4é Business Review organizes French Business Forum at Intercontinental

Hotel.

M O N E Y


The Romanian banking market has

significant potential to increase its

savings products segment, and the

current crisis has forced many

lenders to pay more attention to

these products than ever. According

to specialists, fixed-term deposits

remain the main saving option for

Romanians, while the market is

increasingly offering banks

opportunities to come up with

products geared towards higher-

earning customers.

At least one lender a month has launched a new savings product

Anda Dragan

The current financial and eco-nomic crisis hit all banks worldwideso violently that they needed to goback to the drawing board with boththeir regional and internationalstrategies. Even though Romaniafelt the crisis later than other coun-tries, the consequences are manifestand dramatic. Along with massivelayoffs and bankruptcies of smalllocal firms, the freeze in lending ac-tivity was one of the most signifi-cant negative effects. A l t h o u g hmost financial analysts anticipatedlast year that the first green shootsfor lending in Romania would prob-ably appear in the first quarter of2009, the recovery is still awaited.In spring, specialists tipped borrow-ing to recover in summer, but latershifted their predictions to this fall.

Banks have continued to sufferfrom the crisis and needed an escaperoute from this nightmare. In thiscontext, bank deposits seemed to bea breath of fresh air. Lenders havealso adapted their marketing strate-gies to the new conditions. From a“sell as many loans as you can” ap-

proach, they have moved to a “getas many deposits as possible” poli-cy. In fact, launching new savingsproducts and offering more andmore attractive interest rates to ex-isting account holders have been themain ways that banks have used tocommunicate their new approach.Last but not least, banks’ strategy topersuade customers to put somemoney aside has been pretty aggres-sive. At least one lender a month haslaunched a new savings product oroffered savers a more attractive in-terest rate, both for RON and for-eign currency deposits.

Banks’ switch to savings has hada two-fold effect on the market:

both educating people on the bene-fits of saving and generating extrarevenue for lenders during the cri-sis. An underdeveloped savingsproduct market – like Romania –brings risk as well as opportunity:banks see great potential on the lo-cal market from this point of view.

Another well-known feature ofthe Romanian banking scene is thelack of choice in savings products.Financial products that serve as analternative to classic deposits ac-count for just 3 percent of the totalfinancial products market at present,according to specialists. “Fixed-term deposits will remain the mainsavings product, but will never offer

high earnings on the long term,”said the executive director of thebusiness development and retailproducts division of BCR, SorinMititelu, recently. He added thatplayers now have the opportunity tocreate and bring onto the marketproducts that offer savers higher re-turns. One such example is Garant,recently launched by BCR alongwith BCR Asigurari de Viata ViennaInsurance Group. It offers a safe in-vestment, a minimum guaranteedreturn and life insurance.

SPECIFIC STRATEGIESSome banks offer savings prod-

ucts for the mass market, while oth-ers go more exclusive, targeting aspecific, richer segment of cus-tomers. While the first strategybrings volume, the second ensuresvalue. BCR and BCR Asigurari deViata Vienna Insurance Groupchose to address a limited numberof clients – high earners. The mini-mum deposit is RON 9,000 or EUR2,250. When the savings deal comesto an end, BCR Garant offers a min-imum guaranteed return of 84 per-cent for RON investments and 45percent for EUR ones.

… BUT ROMANIANS STILLWON’T SAVE

But despite banks’ best effortsand the market potential, it seemsthat Romanians are still reluctant tosave their pennies for a rainy day.Some 40 percent of parents haveconsidered setting money aside fortheir children’s future education, al-though almost two thirds of themsay they are concerned about theirkids’ professional future, accordingto an online survey recently con-ducted by insurance company AvivaRomania. The research also foundthat the annual cost of putting achild through higher educationvaries from EUR 1,000 to EUR5,000. The study was conducted on1,000 individuals nationwide. “TheRomanian market for savings prod-ucts for children is still emerging,but it is increasing and we hope thatin a few years it will be as mature asother comparable foreign markets,”said the CEO of Aviva Romania,Shah Rouf.

BANKS SWITCH ATTENTION TO SAVINGSPRODUCTS

E X E C U T I V E B E A T


Negritoiu says the bank he runs will focus on a ‘back to basics’ strategyAnda Dragan

How would you characterize INGB a n k ’s 15 years on the Romanian mar -k e t ?

I have the feeling of mission accom-p l i s hed. We have developed in a good,lasting and meaningful way. It is possi-ble that the initial plan was not too welldefined, but the final result was positive.If I take a look at other countries in theregion, Romania probably had the mostcoherent development. Fifteen yearsago, the bank’s approach was somethingof a short-term one. Like many other in-ternational banks, ING came to Roma-nia based on the “follow the customers”principle. Now, after 15 years, we arecompletely rooted on the Romanianm a r k e t .

What are the main challenges thatING Bank has encountered during its

15 years of presence on the local mar -k e t ?

I think that the main challenges wehave had to face in Romania have beenthe market volatility, both on a local andregional level, the Asian crisis of 1997,the Russian one a year later and the cur-rent economic and financial crisis. A l lthose factors have influenced our activi-ty on the local market. The biggest chal-lenge was the volatility and the reformmeasures taken by the authorities at thetime. ING came to Romania when thelocal market was undeveloped and themonetary and exchange rate policieswere pretty confused.

How has the current crisis alteredING Bank’s local activity, and what are

the main measures the bank has takento neutralize the negative eff e c t s ?

ING Bank Romania was neither sig-nificantly affected by the financial andeconomic crisis nor immune to it. If itw e r e n ’t for the crisis, we would have ex-tended our operations on the local mar-ket much more. But the actual develop-ment level is a comfortable one for us.Obviously we made some administra-tive corrections but they were more cau-tionary than necessary. To this end, werolled out an important cost cutting pro-gram, both in advertising and human re-sources. We didn’t open any newbranches (currently we have a total of220 nationwide), we froze salaries andstopped hiring new people. But we onlyhad a marginal reduction in our work-

ING banks on customers and goes back to basicsforce. All the measures we have takenwere meant to curb potential excesses.

What is your strategy for the Ro -manian market?

We intend to adopt a “back to basics”s t r a t e g y, which means curbing the ex-cesses and limiting ourselves to basicbanking products and services. We arecompletely ruling out speculative trans-actions, which anyway have never beenpart of our product and services portfolio.

In a time of crisis, what are the keythemes for ING Bank Romania?

Our main focus is on clients, both re-tail and wholesale customers, becausewe want them to be satisfied. To meas-ure the assumed risk cautiously and tolimit it as much as possible is the secondimportant objective for us. Finally, it’sabout cost efficiency and transparencyon the market.

When do you think that the loandrought on the Romanian market wille n d ?

Lending picking up depends on boththe local economy and companies’ f u-ture development, and also on the pro-gression of the combined earnings of thepublic. I think that any recovery in bor-rowing will be slow and protracted.We’re not going to get a sudden bounceback. We will see the first green shootsnext year and it is possible that a full re-covery will come in 2011. Besides, INGBank Romania has already seen an in-crease in borrowing from month tomonth. I think that next year lending ac-tivity will be about 30-50 percent of thelevel registered before the crisis, com-pared to the10 percent that we have to-d a y.

How do you see banks’ strategy offocusing on savings products?

Since the very beginning, I believethat ING Bank Romania has focused onsavings products for individuals. Fur-thermore, we also noticed that our com-petition very quickly copied our servic-es. I think that savings products are wel-come in an economy that needs to rebal-ance the ratio of investments to con-sumption. As far as we are concerned, Ican say that ING Bank is in the ideal po-sition: our loans/deposits ratio is about98-100 percent. A n y w a y, savings prod-ucts are good for Romanians, allowingthem to put more money aside and help-ing them to realize that it is better foreveryone to invest or save.

ING Bank Romania, the first

multinational financial institution

to enter Romania, recently

celebrated 15 years of local

activity. On the occasion, general

manager MISU NEGRITOIU t o l d

Business Review about the

lender’s strategy on the local

market and emphasized the main

challenges that ING had faced

during its time in Romania.

According to him, the first green

shoots in lending will be visible

next year, while a full recovery is

unlikely before 2011.

L I N K S


The telecom regulator in Romania is

testing the ground to see whether

there is room for a new 3G license

on the market. The first step is to

reorganize the available radio

spectrum which could facilitate the

advent of new operators.

Meanwhile, Spanish player

Telefonica announced last week that

it had opened an office in Romania

to serve its multinational corporate

clients. And local player RCS&RDS

has launched mobile internet

services.

Otilia Haraga

Media rumors that the regulatorhas decided to take out a new 3G li-cense have some foundation. “AN-COM has not decided to grant a newlicense for 3G services, it has onlyinitiated a series of discussions withthe industry to establish to what ex-tent there are still resources avail-able for a new supplier of 3G serv-ices,” says president Catalin Mari-nescu. He said the decision wouldonly be made when there was radiospectrum and concrete demand fromthe market.

“ANCOM’s target is to reorgan-ize the radio spectrum to make re-source allocation more eff i c i e n t ,which will facilitate the entrance onthe market of new operators. We be-lieve the introduction of 3G servicesin the 900 MHz bandwidth willstimulate the development of thecommunications market in Roma-nia, since it could help cover lesspopulated and rural areas,” he adds.

On September 1, the draft deci-sion regarding the harmonization ofthe use of various radio frequencybands was released for public con-

sultation. Currently, these bands aregiven through license to Orange,Vodafone and Cosmote, which usethem to supply 2G services.

Under the ANCOM project, theoperators who own these bandsthrough license will also be able too ffer 3G mobile communicationsthrough UMTS systems (multime-dia services and data transmission).The draft will be under public con-sultation until October 1.

Demand is likely, given thatTelefonica has announced its arrivalon the Romanian market. It is thelast large operator to enter the Ro-manian market, which is alreadyhome to players such as FranceTelecom, Vodafone and DeutscheTelekom (with 25 percent in Greekcompany OTE, which runs Romt-elecom and Cosmote). Telefonicahas opened operational offices in 15European countries.

“Its entrance on the Romanianmarket will create strong and bal-anced competition among large in-ternational groups – France Tele-com, Vodafone, Deutsche Telekomand Telefonica – which is extremelybeneficial for Romania and the con-sumer,” says the ANCOM presi-dent.

The Telefonica office in Roma-

nia will focus on business servicesfor multinationals. “For a year ortwo, we cannot talk about competi-tion between Telefonica and the oth-er large players on the market, atleast not on the residential side. Forbusiness services, Telefonica al-ready has a portfolio of clients inRomania, and will probably try tolaunch offers to other large compa-nies,” Madalin Lazarescu, researchmanager at IDC Romania, tellsBusiness Review.

Telefonica notified ANCOM inJuly of its intention to supply net-works and electronic communica-tions services. “More competitionon a market that is almost saturated[editor’s note: 130 percent mobiletelephony penetration] means lowertariffs and, therefore, more accessi-bility. A new 3G license requires thereorganization of the spectrum andthen a public auction that might end,or not, in success. In this recessionperiod, it can remain only in projectstage like the WIMAX licenses,”Lazarescu adds. “At this point, noplayer on the market would be like-ly to invest in a 3G license since therecession has strongly affected theirrevenues, and investments in such anetwork cannot be neglected. In alllikelihood, ANCOM thinks that

Telefonica, which recently enteredthe local market, will need a 3G li-cense at some point.”

Although it has had a 3G licensesince 2007, RCS&RDS was offer-ing only Digi Mobil voice services(on top of Digi TV cable and satel-lite television, Digi Net internet andlandline telephony Digi Tel). Lastweek the firm launched mobile in-ternet services Digi Net Mobil, be-coming a five-play operator. Cur-rently, RCS&RDS has a million in-ternet users. Its mobile internetservice, with speeds of up to 7.2Mbps, has been launched only inBihor and Timis county, but will beextended to all large cities in Roma-nia by year’s end.

“ C u r r e n t l y, in the rest ofRCS&RDS’s 3G national network,mobile internet is available at accessspeeds of up to 384 kbps,” say com-pany representatives. Digi Net Mo-bil will be available for a subscrip-tion of up to RON 15 (nearly EUR3.5). “If small tariffs bring manyusers, then revenues might grow.For this, RCS&RDS needs nationalcoverage to be able to target Roma-nians everywhere,” says Marinescu.

While RCS&RDS offers mobileinternet speeds of at most 7.2 Mbps,other players have already tripledthat. Only recently, Vodafone andTelemobil (Zapp) each launched anHSPA+ network which mainly ad-dresses business clients with highspeed necessities. For both compa-nies, this technology will first beavailable in Bucharest.

“Vodafone and Telemobil offerspeeds of 21.6 MHz in limited ar-eas. They will compete better whenthe coverage is complete. A l s o ,RCS&RDS, through its strategy,targets a different segment of clients– on lower incomes and with stan-dard communication needs.RCS&RDS customers who todayhave access to cable internet will beable to acquire mobile internet serv-ices, and prices are low, whichmeans the number of customerscould be high. Finally, in the contextof a crisis, other Romanians couldbecome interested in cheap mobileinternet access.”

The challenge that RCS&RDShas to face right now is that it needs to ensure enough area cover-age to reach large numbers of thepublic.

NEW 3G LICENSE MAY BE IN THE PIPELINE

The first step for a new 3G licence to be launched is to reorganize the radio spectrum

T A L E N T


Two years down the road after

starting his own real estate

development and consultancy

company, Tegron Consulting, Stefan

Gheorghiu has decided to give up on

this dream and seek opportunities

elsewhere. He talks to Business

Review about his experience with

Tegron and the lessons he has

learned.

Stefan Gheorghiu has three options now, and one of them doesn’t involve real estate at all

Corina Saceanu

It took Stefan Gheorghiu sixmonths from when things started tolook bleak for his company, Te g r o nConsulting, until he stopped activityand took the two-month vacation hefelt he had deserved but hadn’t taken inmore than five years. Tegron, the firmhe started in 2007 after working ascountry manager for investment fundEuropolis and US developer Polimeni,had a good start as an owner- d e v e l o p-e r. Gheorghiu had worked on three de-velopment projects, one shopping cen-ter and two office projects. In the firstyear of activity, from consulting solelyon those projects, the firm made EUR500,000. He was planning to have 30employees by the end of this year, andthought it was achievable with thosethree projects alone.

But it all went downhill due to a se-ries of bad decisions by his clients andunfortunate timing with the develop-ment of the market. For the shoppingc e n t e r, the owners who were workingwith Tegron and who had no previousexperience of real estate, decided thatalthough the land was bought, financ-ing was available, a forward purchaser

had been found and even a tenant wason the cards, they would wait to get abetter selling price. The project, whichwas supposed to require EUR 100 mil-lion in total, land included, wasplanned for a provincial Romanianc i t y. The owners would have made a150 percent profit on equity in twoyears, according to Gheorghiu. A f t e rrefusing that deal at the beginning of2008, the foreign investors went backto get the financing, which towards theend of 2008 had become more expen-sive. However, the forward purchaserhad halted all acquisitions and was nolonger interested in the project. Nowthe owners are trying to build a small-er scheme and having difficulties in

coming up with even less money for it.“If they had proceeded with the projectas I had advised them, they would havehad it 90 percent built, 80 percentleased and already sold by now,” saysG h e o rghiu.

For him, it was another lesson –aside from the fact that he is still await-ing payment for the work he did. “Iw o u l d n ’t accept compromises any-more, not even small ones. When I sawclients were not listening to me, Is h o u l d n ’t have tried in vain for yearand a half. I would focus on seriouscustomers who understand what a pro-fessional brings to the business,” Ghe-o rghiu tells Business Review.

It was a frustrating experience he

MARKET MADNESS BRINGS REALTOR TOCAREER CROSSROADS

had had before, at all large firms heworked for. People hired to do a certainjob should be listened to, he says. “Forexample, in December 2006 I told theEuropolis board they should sell every-thing in Romania. But they said it wasnot company policy at the time so theyrefused,” Gheorghiu remembers. “Iwas looking at other markets that weresettled, such as Amsterdam and Lon-don, and realized that the yield of 6.2to 6.4 at the time was not going to getmuch lower. On the short term, I waswrong, because America House wassold at 5.8, but it was just the shortterm. [...] I wasn’t listened to,” he says.H o w e v e r, this was not why he left Eu-ropolis. “It was strictly personal. Iwanted to grow; I didn’t have room togrow in the firm and I wanted more ac-tion,” says the businessman.

From that period, he remembers,after six months of staying in theshade, he managed to impose hisviews, but not as much as he wouldhave wanted.

Laid back and relaxed, in jeans andT-shirt, Stefan Gheorghiu now says hehas three options for the future. “EitherI get a job in Romania, but only doingsomething I believe in and where Ihave the chance to add something tothe firm. I could also leave the country.I have worked abroad before – I am notafraid to go anywhere in the world andwork in top management, I have al-ready proved that. The third option isto give up on real estate, it hurts me tos a y, and focus on a different business.But I hope I will stay in real estate,” headds.

It is easy to become disgusted atsome market practices, says Gheo-rghiu, and he is close to losing interestin what happens in the industry. “I seethat the crisis didn’t do what it wassupposed to do, namely to get rid ofunprofessionals and speculators fromthe market,” he says.

For much of what happened in lo-cal real estate before the financial cri-sis, he lays some of the blame at thedoor of the financial media, which re-ported the plans many had to invest bil-lions of euros in just a couple of years,which were not sustainable and whichwere thrown on the market much tooe a s i l y.

c o r i n a . s a c e a n u @ b u s i n e s s - re v i e w. ro

S T R A T E G Y


Companies’ thirst for watercooler

tanks has been quenched this year,

after budgets dried up in the crisis.

But distribution companies are now

whetting their appetites over

household demand for watercoolers.

It may be a drop in the ocean

compared to the overall market, but

the sector could make a splash even

amidst economic turbulence, say

players.

Cool profits: Cristian Amza, CEO of La Fantana, says his firm is homing in on household consumers

Corina Saceanu

Distribution companies starteddelivering watercoolers to house-hold consumers several years ago,but it was only this year, when cor-porate clients cut their spending onsuch products, that the companiesstarted to focus more on homes. Wa-tercooler firms have started to pushthis new product to the market, hop-ing it will help them offset the dropon the corporate consumer side –and, for some, it seems to haveworked. At first sight, it appears thatthis strategy might erode the sales ofmineral water bottlers, who sellthrough retail chains and withwhom watercooler firms are com-peting for end-consumers feeling alot poorer than they were last year.

La Fantana started to focus onhouseholds for its watercooler prod-ucts in 2008, and step by step hasmanaged to up this segment to 10percent of its portfolio. “Sales onthe corporate segment have de-

creased because of the economic sit-uation, but the household consumersegment has increased,” CristianAmza, CEO of La Fantana, tellsBusiness Review.

The idea came about based ondemand from employees of thefirms where La Fantana was alreadydelivering its products, says Amza.An interesting twist transpired whencompanies started ordering fewerwatercooler products, while homeconsumption increased.

The La Fantana CEO doesn’tsee home use of watercooler prod-ucts as a real threat for mineral wa-ter companies. “There is no directcompetition because you can’t make

a direct comparison,” he says. In fact, one mineral water bottler

has also come up with a watercool-er product: Perla Harghitei launchedthe Cristalina brand, bottled in 19-liter tanks. The product representedone percent of the amount of waterbottled by Perla Harghitei this yearand a mere 0.7 percent of its sales,Barabas Ede, area manager at PerlaH a rghitei, tells Business Review.The watercooler product waslaunched in 2006, and its maingroups of customers are companieswith fewer than 50 employees,which make up 45 percent. Nextcome firms with between 50 and500 employees, with 38 percent,

WATERCOOLER DISTRIBUTORS TRY TO TAP INTOSTAGNANT MARKET WITH HOUSEHOLD PRODUCTS

Main watercooler

production and

distribution firms

La Fantana was set upin 2000 by Cristian Amzaunder the Aqua Naturalbrand. In 2001 it was takenover by Swedish fund Ore-sa Ventures and re-brandedas La Fantana. In 2004, itentered the Serbian market.In 2007, Oresa Ventures ex-ited the business, selling toInnova Capital InvestmentFund, the majority share-h o l d e r. Founder A m z astayed on as minority share-holder. It posted EUR 25million in sales from Roma-nia and Serbia last year.

Cumpana is a local wa-tercooler producer and dis-tribution company set up in1999. In 2007 the firm ac-quired Aqua Regis bottlingand distribution companyfrom RTC Holding, forEUR 1 million.

Perla Harghitei is amineral water bottling com-pany set up in 1990 and pri-vatized in 1994. The com-pany sells bottled mineralwater as well as watercool-er products. It was expect-ing a EUR 17 millionturnover for last year.

S T R A T E G Y


followed by distribution companiesor resellers, 9 percent, and privateand state institutions of over 500employees, contributing the remain-ing 8 percent.

Mineral water sales dropped by30 percent this year compared to thelast, according to Ede. The PerlaHarghitei representative says thatthe worst affected customers werestate companies and firms withmore than 700 employees.

“Although a slight increase inthe consumption of mineral water inRomania has been predicted, I be-lieve it has actually stagnated, oneof the most affected channels beingHORECA, where we have seen adecrease,” says Cristian Amza.

In 2007 mineral water bottlerswere working at full capacity to sat-isfy market demand, and the hotsummers that followed helped pro-ducers achieve year- o n - y e a rgrowth. The same applied to the wa-tercooler market. However, in theconsumption of bottled water, Ro-mania was lagging behind most ofEurope mid-last year, with a figuretwo and a half times less than theEuropean average.

La Fantana is betting on the

household delivery product andplans to develop more on this seg-ment in 2010. “2010 will be as dif-ficult as 2009 is. We expect sales tostay at the same level as this year onthe corporate segment, but we willdevelop household delivery servic-es,” says Amza.

This year, the firm will focus onimproving its distribution, which isits main activity. “Efficient distribu-tion will help us keep our existingcustomers, which is hard in difficulteconomic circumstances. It will alsohelp us grow the B2C portfolio in2010,” adds the CEO.

Last year, La Fantana postedEUR 25 million in sales from Ro-mania and Serbia, which was 20percent higher than the previousy e a r, but expects stagnation thisyear.

Perla Harghitei is currently dis-tributing its watercooler productsonly at regional level, in Harghita,Covasna, Mures, Brasov, Sibiu andthrough a distribution company inBucharest and the south of Roma-nia, but plans to expand nationwide.Last year, the company postedaround EUR 9.6 million in turnover.

c o r i n a . s a c e a n u @ b u s i n e s s - re v i e w. ro


Austrian logistics and transport firmLagermax-AED has rented 2,230 sqmof warehouse and 356 sqm of off i c espace in Equest Logistic Center, accord-ing to DTZ Echinox, which intermedi-ated the deal. The Austrian firm intendsto expand to the new location, after re-locating its headquarters to Arad.

Equest Logistic Center is owned byinvestment fund Equest Balkan Proper-ties. The project is located on the A 1h i g h w a y, 14 kilometers from Bucharest.The first building was opened in Febru-ary 2008 and is fully occupied.

The second building, made up ofsome 18,000 sqm, was ready in Octoberlast year and is more than half leased.The third building, also covering 18,000sqm of warehousing, was finished in

March this year and is also half leased. DTZ Echinox has also intermediat-

ed the lease of 3,200 sqm of warehous-ing space to Fresenius Medical Care inImmoeast’s NordEst Logistic Park.Leasing deals on this segment hadreached 40,000 sqm by the end of A u-gust this year, way down on the 200,000sqm leased in the capital last year. T h e r ehas been no warehouse leasing deal ex-ceeding 10,000 sqm this year, accordingto DTZ Echinox.

The available class A w a r e h o u s estock in Bucharest has reached 750,000sqm, most of which is located in thewest of the city. The vacancy rate onthis segment has increased by 10 per-c e n t .

Corina Saceanu

Rob Stewart, head of Genesis Development

Lagermax-AED leases warehousespace in Equest Logistic Center

Genesis Developmentputs EUR 40 mln intostudent digs

Seven shopping centerdeliveries push Romaniahigh up European rankings

P R O P E R T Y

Around 5 percent of hotel rooms inBucharest have been closed off for H2and almost 65 percent of new hotelopenings postponed, reveals a recentstudy by CB Richard Ellis. Hotel de-mand in Bucharest slumped 10.5 percentin H1 from the same period of last year,putting pressure on room rates and occu-p a n c y. Competition involved slashingrates, reducing operating costs, addingnew services and special offers to up oc-c u p a n c y. Profitability in revenue peravailable room (RevPAR) in H1 fell 39percent from H1 2008 and 27 percentfrom the second half of last year.

Economic turmoil made financingongoing development projects hard and

has caused delays of four-seven monthsin the delivery of future supply. “Basedon the information available, we esti-mate further delays, with projects beingcompleted in Q3 2010. However, thesigning of a management agreementwith Courtyard by Marriott for a 187-room hotel to be delivered in 2011 hasbeen officially announced. New supplyin H1 2009 was mainly four-star and lo-cated in the center and north ofBucharest,” reports CBRE. Bucharest’shotel capacity will grow in H2 with theopening of the five-star Grand Continen-tal hotel (60 rooms), and four- s t a rPhoenicia Express (200 rooms).

Corina Saceanu

CBRE: Too much room at the inn leadsto hotel delays and room closures

Seven shopping centers were fin-ished in Romania this year, totalingsome 135,000 sqm of gross lettable area(GLA), while three existing ones wereexpanded by a total of 28,800 sqm ofGLA, according to a recent report byCushman & Wakefield. Grand A r e n aBucharest, Galleria Suceava, Real IIConstanta, Central Plaza Bacau, GalleriaPiatra Neama, Era Shopping ParkOradea and Trident Sibiu were all com-pleted this year. Plaza Romania, MilitariShopping Center and Iris Titan Shop-ping Center were the three expandedprojects.

Europe saw 120 new shopping cen-ters delivered in the first half of the year,with Romania among the top countriesbased on delivered surface area. Newshopping center deliveries in 2009 willtotal 8.7 million sqm by year-end, a 5percent drop on 2008. In the first half ofthe year, 3.1 million sqm of retail spacewas opened in Europe, down 18 percenton H1 in 2008. Russia ranked top with580,000 sqm of shopping centers deliv-ered during the period. As for 2010, on-ly 7 million sqm of shopping centerspace might be delivered then, accord-ing to Cushman & Wakefield. The figurecould fall even further in 2011, when 5million sqm of retail space is expected tobe opened in Europe. This would be thelowest amount since 2003.

The stock of shopping centers was at2 million sqm of GLA at the end of lasty e a r, equivalent to 94 sqm per inhabi-tant. By the end of the year, an addition-al 89,000 sqm of GLA is expected. T h eBucharest stock was 535,000 sqm ofG L A at the end of last year.

Corina Saceanu

Romanian firm Genesis Devel-opment has put EUR 40 million in-to a residential project consisting ofstudent rental accommodation. Thefirst building in the complex, calledWest Gate Studios, located in theMilitari area of Bucharest, features375 studios and two-room apart-ments. Two other building will de-liver 600 units mid-next year.

The compound features fullyfurnished and equipped apartments,which can be rented from EUR 80per person per month, depending onthe size of the unit. The complex al-so includes agreement areas withinWest Gate Club, a supermarket,restaurant and medical centeramong others.

Genesis Development was setup in 2004 and has been developingoffice space in Bucharest. It current-ly owns Novo Park in the north ofthe capital and West Gate BusinessDistrict.

Corina Saceanu


The local mortar market, which iscurrently on a downwards trend, may re-cover in a year and a half, according toproducer Baumix. The company putsthe market drop at some 30 percent andforecasts a further five percent drop fornext year. Last year, the mortar productsmarket was valued at some EUR 350million. The drop in sales follows a de-crease in the number of construction per-

Baumix expects local mortar market torecover in 2011 after 30 percent drop

Augustin Russu, general manager of Baumix

R E G I O N A L N E W S

P R O P E R T Y

mits issued this year. “While 2009 has still seen sales,

generated by projects that were started in2008, we predict that 2010 will be themost difficult year for the local mortarmarket, due to an estimated 10 percentdrop in the number of projects launchedin 2009 and the first half of 2010. Basedon information from developers, we ex-pect this market to rebound in 2011 , ”says Augustin Russu, general managerof Baumix.

The mortar products market will notreach its 2008 value for three years fromn o w, while the annual growth rate willonly be 10 to 15 percent. In previousyears, the market was growing by 30 to40 percent a year.

Baumix posted a RON 18.5 millionturnover in the first half of this year, up10 percent on the same period of 2008,against an overall market fall of 30 per-cent, according to the company. T h efirm has two production units in Ploiestiand Cluj counties.

Corina Saceanu

PROLOGIS EXTENDSSCHENKER’S LEASE INPOLAND

Industrial developer ProLogis hasextended its lease agreement for26,000 sqm of warehouse space inProLogis Park Teresin with Schenker.The logistics firm currently leasesmore than 162,700 sqm of warehousespace in 11 ProLogis facilitiesthroughout Europe. ProLogis ParkTeresin is located 40 kilometers fromWarsaw city centre. The distributionpark comprises six buildings of a totalof 160,000 sqm. The ProLogis portfo-lio in the Warsaw area comprises ninedistribution parks in 39 buildings, withtotal warehouse space of more than760,000 sqm.

PANATTONI AND AXA REIMBUILD TRNAVA PARK INSLOVAKIA

Polish industrial developer Panat-toni Europe has expanded into the Slo-vakian market through the develop-ment of Trnava Industrial Park, locat-ed next to the Peugeot-Citroen plant.The development will be carried out inpartnership with Axa Reim. Currently

the park holds more than 50,000 sqmof developed industrial A class space,with plans to expand it by around an-other 130,000 sqm.

OMA BUILDS DIY STORE INMINSK

Retailer OMA, the Belarusiansubsidiary of Rautakesko’s subsidiarySenukai, is developing an 8,500-sqm“do it yourself” store in the Belarusiancapital Minsk. The store will be com-pleted by mid-2010. The entire build-ing and home improvement market inBelarus totals some EUR 1.3 billion,of which OMA holds a 5 percentshare.

POLAND EXPECTED TORECOVER AFTER LOWINVESTMENT ACTIVITY

Despite low investment activityand caution among occupiers, the Pol-ish real estate market is expected to re-cover quickly, according to a recent re-port by King Sturge. The volume ofinvestment activity fell by more than45 percent in Poland during 2008 toEUR 1.7 billion, approximately onethird of the deal volume in the peakyear 2006.

G E R M A N I N V E S T M E N T S R E V I E W


The global recession is no respecter

of national origin, and Germany’s

famously solid firms have suffered

along with the rest in Romania. But,

the country’s new ambassador says,

they are here to make sustainable

investments, not as fly-by-nights.

Business Review surveys the big

German investors, their recent

results and moves, and how they

plan to ride out the recession.

The Germans have planted their flag in retail, energy, cars, construction, telecom and finance

Dana Ciuraru, Anda Dragan, OtiliaHaraga, Corina Saceanu

TH E GE R M A N R E T A I L R E C I P ERetail is one of the segments

German companies have homed inon in Romania, with several compa-nies active on this segment in thecountry. DIY retailer Praktiker Ro-mania runs a chain of 26 stores lo-cally, opened during seven years ofactivity in Romania. The Germanretailer has cut back its investments

across Eastern Europe due to wors-ening market conditions, which hasimpacted on Romania as well. In thefirst half of this year it opened justone store in Focsani, a EUR 11 mil-lion investment. The firm has alsoput EUR 2.2 million into expandingits existing shop in Craiova by2,000 sqm. Last year, by contrast,Praktiker opened five stores in Ro-mania, with investments betweenEUR 8 and 15 million. The retailer’ssales in Romania reached EUR 110million in the first half of the year,down 14.3 percent on H1 in 2008.The decline in sales was also fueled

by fluctuations in the RON/EUR exchange rate. Its sales in local currency were only 1.3 percentdown.

Hornbach, another DIY retailer,started its Romanian story with twoshops in Bucharest, then expandedto Brasov. Having entered Romaniain 2007, the company has put EUR63 million into its two units inBucharest, and EUR 19 million into the Brasov outlet. It plans toopen another store in Bucharest, according to previous announce-ments.

Tengelmann Group runs two re-

tail chains in Romania. One is thePlus discount chain, which has beenexpanding throughout the countrysince 2002. Plus Discount has 82stores in Romania, but it plans toreach 170 shops in total in the nextcouple of years. So far, Plus Dis-count has invested around EUR 300million in Romania. For future de-velopments, the retailer targ e t scities with over 20,000 inhabitants.The latest store was opened in De-va, the 11th opening this year,which required a EUR 1.6 millioninvestment.

DIY retailer OBI, also part ofTengelmann Group, has beenamong the few new German in-vestors in Romania of late. The re-tailer opened its first outlet in thecountry in November last year inOradea. Now it runs four stores, oneof which is in Bucharest. The aver-age investment in an Obi store isEUR 5 million.

The cash and carry segment inRomania is represented by two Ger-man retailers, Metro Cash & Carryand Selgros Cash & Carry. MetroCash & Carry is also the largest re-tailer on the Romanian marketranked by turnover: EUR 1.5 billionlast year. The firm, which enteredthe local market in 1996, hasopened 24 retail centers, with an av-erage investment of EUR 20 millioneach.

The latest opening was a shop in Deva. It has renovated eightof its stores, in an investment pro-gram worth EUR 40 million. Thecompany is analyzing the marketand considering opening otherstores, according to its representa-tives.

TOUGH TIMES TEST TEUTONIC TITANS

G E R M A N I N V E S T M E N T S R E V I E W


Selgros Cash & Carry, part ofthe German group Rewe, has re-cently opened its 18th store in Ro-mania, with an investment of EUR38 million. The shop, in the DrumulTaberei area of Bucharest, is alsothe fourth it operates in Bucharest.The average investment in openinga Selgros store in Romania isaround EUR 17 million. The retailerposted an EUR 858 million turnoverlast year. The Rewe group’s other retail chains, Billa and Penny Market, also have a localpresence.

ENERGY COMPANIES KEEPINVESTING, CAUTIOUSLY

The energy and oil and gas sec-tors also boast important Germaninvestors. Linde Gas is a significantplayer on the gas market with hun-dreds of millions of euros in invest-ments so far. This year, the compa-ny announced that it would investEUR 250 million in an air separa-tion factory to supply oxygen to theArcelorMittal Galati unit, which isestimated to be fully functional intwo years.

Also, at the beginning of theyear, the German firm inaugurated asecond air separation unit worthEUR 25 million at Otelul Rosu. Partof this unit’s production will go tothe local plant, controlled byMechel International Holding. Thefirst air separation unit, built atRamnicu Valcea, was inaugurated in2005 by the German investor.

Another well-known name inthe energy sector is E.ON. The Ger-man company’s first investment inRomania was made in 2005, when itacquired the majority share pack-ages in Distrigaz Nord and ElectricaMoldova, previously controlled bythe state. In the past few years, thecompany has repeatedly expressedits discontent over the gas and ener-gy price policies implemented bythe Romanian Energ y R e g u l a t o r yAuthority.

“In the current economic con-text, E.ON Romania’s main objec-tive is to consolidate our company’sposition on the local energy marketby developing our client portfolioand ensuring a secure gas and ener-gy supply for consumers,” FrankHajdinjak, E.ON Romania GM, toldBusiness Review. According to him,last year E.ON Moldova Distributieinvested about EUR 43 million,while E.ON Gaz Distributie allottedapproximately EUR 50 million tomodernization investments. Accord-ing to Hajdinjak, the company has

implemented some draconian meas-ures during the current economiccrisis, such as client debt manage-ment, in order to keep operationsunder control.

CAR COMPANIES CUT COSTSAutomobile Bavaria was estab-

lished in Brasov in 1994, sincewhen it has extended to cover 10important cities, with its own BMWoutlets. Michael Schmidt, Automo-bile Bavaria Group president toldBusiness Review the company’s to-tal investment in Romania reachedtens of millions of euros. Accordingto him, building an outlet with ashowroom and service center in-volves costs of about EUR 3 to 4million, while EUR 12 million wasinvested in the BMW headquartersin Baneasa in 2006.

But every investment has paidoff, he said. “In 1994, when we en-tered the market, we sold 11 BMW,while last year the number reachedover 2,600 new BMWs and Minis,not to mention used cars,” added thepresident.

However, this year the marketfor luxury cars has declined, withthe credit freeze and buyer reluc-tance the main drawbacks. The Au-tomobile Bavaria Group presidentsaid that despite the market situa-tion, the company would soon opena new service center for BMWs andMinis in Craiova, following othermillion-euro investments made thisyear. “In May we opened a brandnew BMW facility in Sibiu worthEUR 3 million, while in FebruaryMAN received a new center in thesame city,” said Schmidt.

Another important German in-vestor in the automotive sector isContinental. The firm made its firstinvestment in Romania in 1998, in atire plant in Timisoara. The site,

which employs 1,350 people, hasreceived EUR 250 million of invest-ments. Gradually, Continental ex-tended its operations in Romania,and currently owns eight productionunits and three research and devel-opment centers in Timisoara, Sibiu,Carei, Arad and Iasi, a joint venturein Slatina and an Eastern Europeantire distribution centre in Sacalaz.The slump in the car market has al-so negatively impacted the compa-ny’s results.

Thierry Wipff, Continental fac-

tory manager in Timisoara, told BRthat the corporation’s main goal wasto reduce its net indebtedness – gen-erated by the acquisition of SiemensVDO in 2007 – further.

“Additionally we also have todeal with the effects of the financialcrisis on the automotive business. Inorder to respond to all the chal-lenges, we have introduced, corpo-ration wide, an extensive cost-cut-ting program. This includes variousmeasures. Also, most of the invest-ments for the coming years havebeen postponed,” said Wipff. Ac-cording to him, the biggest impedi-ment for Continental at the momentis “the lack of support from the localauthorities in Timisoara and thestate of the infrastructure, which hashardly improved over the last 11years we have been here.”

CONSTRUCTION DOWNTURNAFFECTS GERMAN COMPANIES

Several German companies arealso working in the real estate andconstruction segments. BuilderHeberger Constructii, the local sub-sidiary of German Heberger Bau,has been working in Romania since2004.

The German car brand has got a new look: the Trabant NT was launched at the Frankfurt Auto Show

G E R M A N I N V E S T M E N T R E V I E W


The local subsidiary posted lastyear a quarter of the group’s entirebusiness.While this type of activitydoesn’t involve the same level of in-vestments as retail, for example,constructors are putting their shareinto developments which do needlarge sums.

PVC profiles producer Gealan,subsidiary of Gealan Fenster Sys-teme GmbH, has been working inRomania since 1997. The company,which doubled its turnover onceevery two years in Romania until2008, has been experiencing lowersales volumes, 10 to 15 percentdown on last year. But the overallPVC profiles market has dropped bymore, around 30 percent. The com-pany was planning to relocate itsproduction and offices and also in-crease production capacity, but hasdelayed the project until bettertimes.

The German ceramic manufac-turer Villeroy & Boch started its op-erations on the local market in 1996,

when it acquired a 51 percent sharepackage in the Romanian companyMondial Lugoj, a local manufactur-er of ceramic sanitary ware. For thisstake the company paid EUR 10million and since then the Germanfirm has invested an additional EUR25 million in the development of thelocal operations.

In 2006, Mondial reported a netprofit of EUR 3.65 million whilelast year’s results show a net loss ofEUR 3.8 million.

GERMAN FIRMS ARE ON THEMONEY

German investors have alwaysbeen well represented on the Ro-manian financial market. BothGerman insurance companies andbanks are among the most impor-tant players. Allianz-Tiriac Asigu-rari, Euler Hermes, Signal IdunaAsigurari de Viata and GermanRomanian Assurance are some ofthe big-name insurers on the localmarket.

Moving onto banks, Com-merzbank and Deutsche Bankeach operate through a representa-tive office, while MKB Romexter-ra Bank and ProCredit Bank havebranches nationwide. The biggestplayer on Romanian general insur-ance market is A l l i a n z - Ti r i a cAsigurari.

The company posted a RON351.3 million gross written premi-um revenues and a RON 5.2 mil-lion aggregated operational resultin the first quarter of 2009. Fur-thermore, gross written premiumrevenues on life insurance in-creased by 7.4 percent on the sameperiod of 2008.

“Like the whole insurancemarket, we’re also feeling the ef-fects of the crisis but are manag-ing better the pressure from un-favourable market conditions,”said Allianz-Tiriac Asigurari GMCristian Constantinescu.

M e a n w h i l e, Euler Hermes,member of Allianz Group, is an-other significant player on themarket.

It came to Romania in 2003and last year launched Euler Her-mes Kreditversicherungs-AGBucharest Branch. The firm oper-ates along with Euler Hermes Ser-vicii Financiare.

“In the last few years the localeconomy has increased tremendous-ly and has created a great potentialfor commercial loans insurance. Weare able through our branch to reachthe group’s international standard interms of products and services tai-lored to Romanian consumers,” saidboard member of Euler HermesKreditversicherungs-AG in Ger-many, Jochen Dumler.

Elsewhere, another insurer, Sig-nal Iduna, launched its operationson the local market last year.

At that time, company represen-

tatives announced that average andhigh earners were the main targetalong with employers which intend-ed to retain and motivate their em-ployees.

Last year, Signal Iduna’s repre-sentatives said the company wantedto become leader on the Romanianprivate health insurance segment infour years.

One of the German banks activein Romania is ProCredit Bank, partof ProCredit Holding. It was estab-lished in 2002 under the name ofBanca de Microfinantare Miro (Mi-c r o f inance Bank Miro). ProCreditHolding is the parent company of aglobal group of 22 ProCredit banksand was founded as InternationaleMicro Investitionen AG (IMI) in 1998by the development finance consul-tancy company IPC.

ProCredit Holding is committedto expanding access to financial serv-ices in developing countries and tran-sition economies by building a groupof banks that are providers of finan-cial services for very small, small andmedium-sized businesses as well asthe general public in their countries ofoperation.

TEUTONIC TELECOMDeutsche Telekom AG is one of

significant global operators present onthe Romanian market. The Germancompany has a stake of 25 percent inGreek operator OTE, which runs twolarge telecom players on the localmarket: Romtelecom and Cosmote.However, it currently has no represen-tative on the management board of thetwo operators.

P r e v i o u s l y, Panagis Vo u r l o u m i s ,president and CEO of OTE, said therewould not be a merger between Romt-elecom and Cosmote, and no rebrand-ing, but the two companies would col-laborate much more closely than hith-erto.

Metro is one of the German companies carving up the local retail market

G E R M A N I N V E S T M E N T R E V I E W / I N T E R V I E W


Anda Dragan

How important are German in -vestments in Romania and what posi -tion does Germany occupy in theranking of foreign investors in Roma -n i a ?

Germany is Romania’s most impor-tant trading partner and ranks third forforeign direct investments (FDI). T h i sproves that Romania is of key impor-tance to German business and vice ver-sa. Romania’s strategic position, thesize of its market and its comparativeadvantages as a location for production– such as its comparatively low laborcosts – attract a large amount of Ger-man companies.

What are the most attractive sec -tors and regions of the country forthe German companies that are ex -pected to enter the local market thisy e a r ?

Romania offers interesting busi-ness opportunities in all fields relatedto infrastructure and the environment,such as water and waste managementand components for green energ y. Inthese fields, a significant demandmeets a specific German expertise. Wealso continue to see a strong interest insome sectors of retailing, where someGerman companies are expanding.

Is the volume of German invest -ment in Romania still expected to in -

crease now that there are not manylarge companies to come?

That is difficult to foresee. Manycompanies made their investment deci-sions before the onset of the economiccrisis and we are glad to see that theyare sticking to them. This shows thatGerman companies are interested insustainable economic relations ratherthan in continual coming and going.

How would you characterize thelocal economic environment? W h a tincentives do German companieswant in order to invest more in Roma -n i a ?

I believe that the specific advan-tages that Romania offers are still there.Business profits still result from rela-tively low wages and an attractive do-mestic market within the EuropeanUnion. However, it is also clear that

Romania will have to do its homeworkto maintain these advantages: it needsto make serious efforts at improvingand expanding its infrastructure and atreducing bureaucracy and improvingt r a n s p a r e n c y. Investors also need to beable to rely on the fact that their con-tract partners meet their obligations.These are points that German investorsraise over and over again. We also hopethat the EU funds that are available forthese purposes will be put to use.

After a relatively short time as theAmbassador of Germany in Roma -nia, how do you find the country andthe business scene? Did you chooseRomania or did Romania choosey o u ?

I deplore the fact that I did notcome to know Romania much earlierin my career. I try to learn and listen.

German firms want long-term linksSo far, I think I chose Romania. I hopethe moment is not too far off when Ro-mania chooses me.

What was the value of German di -rect investment in Romania in 2008,and what is the forecast for 2009?How many German companies havebeen registered to invest in Romaniain 2008 and how many are expected todo the same in 2009?

German direct investment in Ro-mania in 2008 amounted to EUR 2.33billion. This represents more than 10percent of overall FDI. Since someGerman firms invest in Romaniathrough their non-German subsidiaries,the de facto significance of Germany asa source of FDI is even greater. In 2008,Romania had over 16,000 firms withGerman financial participation, the ma-jority of which were small- and medi-um-sized enterprises. You may labelthis as of strategic importance.

As for the outlook for 2009, we allknow that, in the first half of 2009,there has been a significant drop inoverall FDI to Romania and world-wide. However, interestingly, the num-bers available to us so far for the periodshow us that there has been a steady in-crease in both the number of registeredGerman investors and the volume oflisted capital, which is an encouragingsignal. It might be too early to drawgeneral conclusions, but I think it issafe to say that Romania remains an in-teresting market for German investors.

Which was the value of the com -mercial exchanges between Romaniaand Germany in 2008 and what isyour estimate for the current year?

In 2008, German imports to Roma-nia reached EUR 8.7 billion, while ex-ports of Romanian goods and servicesto Germany accounted for EUR 4.8 bil-lion, thus resulting in a trade volume ofEUR 13.5 billion. In the first fivemonths of 2009, bilateral trade betweenRomania and Germany totaled EUR4.5 million, whilst Romania’s currentaccount deficit in the trade between ourtwo countries has gone down signifi-c a n t l y.

In which field do you think Ger -man investments will be more activethis year and in the years to come?

We’re currently seeing a strong interest in sectors such as renewablee n e rgy components, building materialsand IT.

ANDREAS VON METTENHEIM, the

new German Ambassador to

Romania, told Business Review

about his hopes for future

economic relations between the

two countries, what German firms

look for on the local market and

his experience here so far.

B U S I N E S S R E V I E W E V E N T S


Your old new Business Review!

■ 1. Business Review’s Media and Advertising seminar gathered about 40 participants to share views on industry trends

■ 2. Maria Tudor of Zenith Media described this year’s budget cuts. Listening are Peter Jansen of RAAA and Cohn&Jansen ad

agency (left), Shuja Shaikh of Kubis Interactive and Bill Avery (right) ■ 3. Marten Schoenrock, GM of Intercontinental, Jean-

Pierre Vigroux of Mazars and Kurt Strohmayer of Aducco ■ 4. Angela Rosca of TaxHouse and Andreea Rosca of Realitatea/Cat-

evencu media group ■ 5. Andrei and Sorana Savu of Premium PR ■ 6. Jonathan Youens, head of RICS in Romania, and Marten

Schoenrock ■ 7. Kurt Strohmayer, Roberto Musneci of Serban, Musneci & Associates and George Alberts of KD I n v e s t m e n t s

■ 8. Stacy Quinney of Valhalla Gold Mining, Guy Burrow of CEC Govt Relations and James Gray-Cheape of Pegasus

■ 9. Friedrich Neimann of Hilton, Kurt Strohmayer and Tinu Sebesanu ■ 10.Steven van Groningen of Raiffeisen Bank, and Eric

Royer ■ 11. Oana Nastase, Valeria van Groningen and Gina Royer of BRD ■ 12. Dierk Zeigert of News Outdoor and Octavian

Popescu of Initiative Media ■ 13.R-L: Paolo Chighine of Enel, Bill Avery of Business Review, Radu Florescu of Saatchi & Saatchi,

Steven van Groningen and Edit Vesser of BNP P a r i b a s

1 2 3

4 5 6

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B U S I N E S S R E V I E W E V E N T S


1311 12

Media agency representatives dis-cussed the impact of the economic crisison the media market as well as markettrends during an event organized byBusiness Review on Thursday at the In-tercontinental Hotel. “While this year isnot over yet, I generally use a 1:3 factorto establish what is going on: if the GDPgoes down 1 percent, advertising goesdown 3 percent. This year, the downfallwill be between 25 and 30 percent,” saidPeter Jansen, president of Cohn & Jansencreative advertising agency. “It is alsotrue that over the last two-three years,salaries have gone through the roof.”Maria Tu d o r, managing director ofagency Zenith Media, says the decreasewill be more than 30 percent at the end ofthe year. Alina Stanciu, business directorat Ogilvy Public Relations, said clientshave used PR services more than in pre-vious years. “PR is at the same level, ifnot higher than last year,” said Stanciu.Andreea Rosca, director of businesspress at the Realitatea-Catavencu group,explained how the group was affected bythe crisis. “We didn’t have a consolidat-ed position on the market, we didn’t fin-ish investing in our brands and suddenly,there is no money on the market. So wesaid: maybe we will be losing somethingbetween 30-40 percent (less than that forRealitatea TV).” Their strategy was tocreate integrated projects. Shuja Shaikh,managing partner of Kubis Interactive,said he still has problems recruiting qual-ity employees specialized in the internetfield. However, things are looking up inthe online market, which has registeredprogress in the past one-three years, butclients still need to learn the importanceof issues such as search engine optimiza-tion. Bill Av e r y, publisher of BusinessR e v i e w, presented the new format of themagazine and Business Review Plusconcept, which stands for integrated me-dia presence: print. online and events.

The seminar was followed by acocktail party celebrating BR’s newlook. Almost 150 people attended theevening event held at the recently opened21st floor of the Intercontinental Hotel.

Otilia Haraga

P O W E R


Despite months of discussions andscenarios, the creation of the twostate energy companies is far from afait accompli. State officials disagreeon the type of management for thecompanies, the people in charge, theBucharest Stock Exchange listing, theProperty Fund’s stake in thesecompanies and what will happenwith the ongoing contracts of thefirms that will form the state-controlled energy giants.

Dana Ciuraru

The plans for the creation of thetwo energy companies change fromone week to another, after more thanhalf a year of tough discussions andnegotiations. The latest scenario isthat the first company will includeTurceni, Rovinari and Craiova energ ycomplexes, the nuclear units fromCernavoda, Valcea, Slatina and Sibiuhydro power plants and SocietateaNatinala a Lignitului Oltenia (SNLO),a lignite-mining company. In thesame scenario, the second companywould be formed of Paroseni and De-va energy production units, Electro-centrale Bucharest (ELCEN) and thehydro power plants not included inthe first company. It is a big ask forany manager in charge of such diff e r-ent assets, which is why the state en-e rgy giants’ management has been aproblem from the beginning of thediscussions.

Until a week ago, AdrieanVideanu, economy minister, main-tained that the management of the twostate energy companies could be pri-vate, and added that he would presentthis scenario to the government. Butthings have changed since then, as Tu-dor Serban, secretary of state for ener-g y, recently said the exact opposite.

“When I said that we want privatemanagement at both companies, wemean management on private princi-ples, not bringing in other peoplefrom London to show us how stupidwe are,” said Serban.

State officials are not even consis-tent in their positions on the actualmanagers of these two companies.Serban said in an conference that theheads of the companies would beConstantin Balasoiu, current CEO ofCEN Craiova, supported by the De-mocrat Liberal Party (PD-L), and Mi-hai David, CEO of Hidroelectrica anda Social Democrat Party (PSD) mem-b e r. Subsequently, he added that theywould just coordinate the activities ofthe two companies, until the appoint-ment of the actual CEOs.

TO B E L I S T E D O R N O T T O B EL I S T E D O N T H E B S E ?

The initial term for the emer-gency ordinance to set up the twocompanies was September. But nowEconomy Ministry officials are say-ing the end of the year. David said itwould take six months from estab-lishment until the two companies be-come operational. “From January 1,

2010, the two national energy compa-nies will be functional on paper, butwe can only talk about their being ac-tually operational in 2012. Until thenthey will toil in vain,” said Serban.

He also announced that one op-tion was to list 15-20 percent of theshares in the energy firms on theBucharest Stock Exchange (BSE).The secretary believes that the Prop-erty Fund’s stakes in the pair is anoth-er key issue.

The uncertainty has drawn aclamor from unions across the ener-gy sector. After protests from theHidroelectrica union, complaintsarose from workers at Electrica andits subsidiaries. Moreover, Nuclear-electrica union reps also disagreewith the plans for the energy reor-ganization. Adrian Baicusi, generalmanager of Transelectrica – whocame to work for the state after ex-tensive experience in the privatesector, his last position being that ofCEO of Siemens LLC – does notbelieve that the two giant energycompanies, which will unite mosta s s e t s ’ local production, will beready in six months, as declared,barring a “real revolution”.

“The restructuring process willbe long and painful. We also have torestructure our staff. In six months,the two companies could be opera-tional on paper, but practically itmay take two years. If they succeed,it will be a revolution that will radi-cally change the market in the com-ing years,” says Baicusi.

CU R R E N T C O N T R A C T S T O B ER E N E G O T I A T E D

The creation of the two nationale n e rgy companies has upset not on-ly the unions, but also market play-ers that have already negotiated en-e rgy purchase contracts and are nowin the situation of not knowing whatwill happen next year. For example,Hidroelectrica will renegotiate theprice of energy supplied to the alu-minum producer Alro Slatina, cur-rently EUR 25 per MWh, a price al-ready hiked by 14 percent as a resultof recent negotiations. “There willbe a substantial increase but we willhave to see how things progressfrom the beginning of the year,” saidDavid.The fire test in the forming ofthese companies will be reviewingthe loans taken out by the state-owned companies, because lendersare likely to require early repaymentof loans worth tens or hundreds ofmillions of euros.

Also, recently, Mihai David an-nounced that the state giants couldtake part in the investment companyfor the construction of nuclear units3 and 4 at Cernavoda. But this is an-other confusing statement from theEconomy Ministry, as “the currentmemorandum of understandingsigned between all investors clearlystates that if an investor renouncessome of his shares that stake will beequally split between the other in-vestors,” says Pompiliu Budulan,GM of Nuclearelectrica. One cer-tainty in this messy state energy re-o rganization is that Romania isabout to complete two agreementswith Hungary and Austria for theunification of the energy marketsthat will enable local producers toexport to Germany and take advan-tage of demand in several Europeancountries, really putting Romania onthe European energy market.

d a n a . c i u r a ru @ b u s i n e s s - re v i e w. ro

STATE ENERGY SECTOR REORGANIZATIONGETS MESSIER

Constantin Balasoiu, CEO of CEN Craiova

Pompiliu Budulan, GM of Nuclearelectrica

Mihai David, CEO of Hidroelectrica

Tudor Serban, secretary of state for energy

R E S T A U R A N T R E V I E W / C I T Y


What a surprise it wasfor me to rediscoverthis place. It really

is superb and I ask you tocheck it out for yourselves, asit would be a crime againstgastronomy if it were to faildue to local indiff e r e n c e !

I found this location tenyears ago when diff e r e n towners had it. Then it wascalled Four Seasons and itwas the happiest, loveliestmost successful restaurant( Turkish) in town.

But it was too happy, toobeautiful and too successfulfor the mean, evil mindedcommunist neighbours wholive in a squalid block abovethe restaurant; for with all thehate and envy that can onlyexist here, they had it closeddown under the dubious pre-text of there being a cookingaroma emanating from ther e s t a u r a n t .

So after an absence ofmany years, along came Bul-garian investors and openedup the location as Balcic(look for La Perla Restaurant,and enter by the sign sayingPatisserie; Balcic is on theleft). They have spent a smallfortune on renovating theplace and it now caters for160 covers which means itcan compete with the majorhotels in town. And competeit does on several levels.

The décor is clean, wood-en and rustic. But here thefood and wine do the talking.

I was initially attracted to itbecause I cannot find Bulgar-ian wine anywhere in thisc o u n t r y. To put it simply, youcan take the highest qualityand most expensive Roman-ian wine, and its Bulgarianequivalent in quality will costa mere EUR 6!

For this reason, I joinmany people who drive toBulgaria each month to stockup on food and wine, all ofwhich costs a fraction ofgreedy Romanian priceswhich are charged here forlesser quality products.

I approached Balcic,knowing I could find somefine wine, and if the food wasgood value, I would considerit to be a bonus. So let’s gothrough my bonus treat to-g e t h e r.

You can dine on a multi-tude of starters in the Greek‘ m e z z a ’ fashion, or alterna-tively be more traditionalwith main courses anddesserts. We tried as much aswe could eat. ‘Buff a l oS a u s a g e ’ sliced as thin sliverswas both aromatic and spicyand a great side dish at RON 9. So too was the ‘Kaiser’ s l i c e dpaprika beef and the lambPastrami at the same price.

Our waiter suggested aBulgarian version of focacciabread which was as good asany simple Italian focaccia Ihave eaten here.

So we passed on a selec-

tion of some 50 Mezza-stylebaby dishes costing from amere RON 4-9 and got stuckin to the big stuff – the mainc o u r s e s .

With nearly 100 mainsand sides on off e r, there wasonly one beef dish! All waspork and lamb, and I had noproblem with either of them.So at a cheap RON 35 I had alamb ‘St George’; which wasa perfect casserole of a wholeshoulder of lamb which wasfar too big for me to finish. Itcame with rice and vegeta-bles which had shared thesame casserole dish – and tomy delight there was a smallbowl of the meat juices fromthe lamb.

Girlie chose a lamb ke-bab, which failed as it wasnot quite the A r a b i a n - s t y l e‘ k o f t a ’ on a stick you wouldexpect. No, it was a simpledish roasted, small end-of-rack ribs. But it was a mis-take in translation so they aref o rg i v e n .

I took with me a shaven-headed best friend who musthave shaved his brains offwith his hair, for he chose asimple chicken schnitzel withchips. He passed on a rich se-lection of non-Romaniandishes, including a wholeroast rabbit!

Although I don’t eatdesserts, Girlie just had to or-der a fat, choccie, creamyTiramisu which she loved,but as it arrived she unrea-sonably requested that itshould be garnished withsome fruit puree. Well, theHouse did just that without acomplaint from them. BravoH o u s e !

In order to save my fin-gers from too much work inwriting this further, may Isuggest you check their menuon their site: www. r e s t a u r a n t-b a l c i c . c o m .

And my last word… theBulgarian wine was excellent– it always is!

Michael Barc l a ym a b . m e d i a @ d n t . ro

A BULGARIAN TREASUREBALCIC, STEFAN CEL MARE AND DOROBANTI 021 230 5535

So-fia, so good: excellent Bulgarian cuisine at the former Four Seasons

Piggy in the middle: the livestock gets comfortable

The film recreates popular urban myths of the period

Romania’s rustic culture is depicted

Tales from the GoldenAge, the film written by Ro-manian director CristianMungiu, of 4 months, 3weeks, 2 days fame, and di-rected along with Ioana Uri-caru, Hanno Hoefer, RazvanMarculescu and ConstantinPopescu, is set to hit Roman-ian screens on September 25with its first part, Comrades,Life is Beautiful!, while thesecond part, Free Time Love,

will run from October 23.The film details the final 15years of the Ceausescuregime, the worst in Roma-n i a ’s history, and adapts forthe big screen the most pop-ular urban myths of the peri-od. It aims to re-capture themood of the time, portrayingthe survival of a nation hav-ing to face daily the twistedlogic of a dictatorship.

Tales from the Golden Agepremiers in Bucharest this week

C I T Y


Serban Radu and Nicoleta Dumitru, owners ofCarturesti

The National Art Museum in Bucharest was open between 7pm and 4am last weekend as part of theBucharest Days celebrations. The European Art Gallery inside the museum can be visited free ofcharge on Saturday.

Local book chain Carturesti hasopened its tenth location, inside theFrench Institute. The outlet willcater for a French-language audi-ence with a wide editorial selectionof over 2,000 titles. In addition tothe new bookstore, a coffee houseserving French pastry products willfeature. Besides its main use, thespace is set to accommodate eventsorganized by the French Instituteand Carturesti. The bookstore wasdesigned by Studio Kim Bucsa Dia-conu in partnership with Lundi etDemi, represented by Attila Kimand designer Ciprian Tocu. ■

Carturesti opens first French bookstore at the French Institute

White Nights at the National Art MuseumWhite Nights at the National Art Museum

First movie fest for children kicks offKinodiseea, the first movie festival for children in Romania, will take place in

Bucharest from September 22-27 at Gloria Cinema and the Romanian Peasant’sMuseum. In having a children’s festival of its own, Bucharest will join other larg ecities such as New York, Chicago and London. The event aims to inject new lifeinto the local film industry for children and provide an alternative to Hollywoodproductions. All in all, 12 feature-length movies for children, which were shownat international festivals, will be broadcast. Three big-name local productions willalso be included in a special day – The Day of the Romanian Movie. Org a n i z e r s

estimate the event will draw a crowd of up to 10,000 over the five days of the fes-tival, which not only targets Romanian but also foreign children.

The event was started with the aim of shaping the tastes of children between 6and 12 and offering them easier access to culture. Despite recent high-profile Ro-manian movies garnering attention for the national industry, cinema attendance andmovie theater use are very low. “For this reason, we have an acute and worryingcrisis. Very rarely has there been a greater contrast between the excellence of an artform and the public response,” say organizers Metropolis Film and the Cultural A s-sociation SCRIPT.

Otilia Haraga

Business Review Issue 33, 2009

Documents

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