EBRD sets sights on Romania as reforms gather pace
The European Bank for Reconstruction and Development and the Bucharest Stock Exchange hope to attract international investors to the Romanian stock market following the launch of an ambitious government reform programme intended to get the country upgraded from frontier to emerging market status.
The EBRD recently bought a stake in the Bucharest exchange and is now promoting the STEAM project – Set of actions Towards Establishing and Acknowledgement of the emerging Market status – project approved by Romania’s Financial Supervisory Authority in August.
“We like the way Romania is heading,” said Jim Turnbull, senior manager in local capital markets at EBRD and board member of Romania’s Central Depository. “Investors are starting to see Romania as a capital raising area. It has good fundamentals, faster growth than the EU average and attractive dividends.”
The STEAM initiative consists of measures aimed at getting Romania reclassified as an emerging market within two years:
- increasing the accessibility and attractiveness of the Romanian capital market;
- streamlining and fluidizing the financial instrument lending operations and short selling transactions;
- developing the local primary and secondary bond markets (municipal and corporate);
- increasing the liquidity and attracting new investors;
- increasing the visibility of Romanian undertakings listed on the capital market by the possibility to be listed on other markets as well;
- increasing the implementation level of the corporate governance principles at the level of issuers, intermediaries, market operators, depositories, etc.;
- improving the accounting system of the entities regulated and supervised by FSE by aligning it with the IFRS standards
“The STEAM project is the priority strategic objective identified and assumed by FSA for the capital market,” said Mișu Negrițoiu, president of Romania’s FSA. “It is consistent with the need to open the market, to streamline and facilitate access to invest in Romania and will result in an increase of the volume of investments and liquidity. Our goal is to be proactive with respect to markets and to facilitate the advancement of the capital market to a new strategic dimension. STEAM, as suggested by the acronym, shows that FSA is committed vigorously, strongly, firmly and enthusiastically to obtaining the status of emerging market for the Romanian capital market.”
Former Warsaw Stock Exchange Ludwik Sobolewski joined Bucharest Stock Exchange as its chief executive in July 2014. According to Turnbull, his appointment with the Romanian exchange was a match made in heaven. Sobolewski has experience. Having helped to build the Warsaw Exchange into the largest in central and eastern Europe, gaining 45 foreign listings. Romania had just two, as of Sobolewski’s arrival in Bucharest. Turnbull added that Sobolewski’s first task had been to replace many of the manual paper tasks that were still being used with more modern methods.
“Romania is a rising tiger of central and eastern Europe,” said Sobolewski. “Our goal is to reach out to international investors willing to increase their presence on our market and to discuss how Romania can become a fully-fledged member of the emerging-markets family. We also want to hear from the investors about any challenges they might be facing. This is an important dialogue.”