ECONOMY

Romania serious about sell-offs

BUCHAREST (Reuters) – Romania plans to start negotiations at the end of next month to sell 25 percent of its biggest bank, Banca Comerciala Romana (BCR), to international lenders, a senior government official said yesterday. Under an accord with the International Monetary Fund (IMF), Romania has until September to sell a minority stake in BCR to the European Bank for Reconstruction and Development (EBRD) and to the International Finance Corp (IFC), which is the World Bank’s investment arm. «We plan to start negotiations with the two institutions toward the end of April,» Privatization Minister Ovidiu Musetescu told a news conference. «We hope to finalize the transaction by the end of July.» «This transaction, which will put a majority in BCR into private hands, meets the demands of the IMF,» Musetescu added. The sale of BCR, which represents one-third of the ex-communist Balkan country’s banking assets, was hit by the world economic slowdown last year after Dutch bank ING withdrew and two remaining suitors failed to qualify. Preliminary figures show BCR’s 2002 net profit at around $160 million, up from $146 million in 2001 and in line with projections, Musetescu said. Earlier this month the IMF said it gave Romania until 2006 to sell BCR to a strategic investor, in the hope that the world economic climate will improve by then. Musetescu said the contract with the EBRD and the IFC, who will get 12.5 percent each, will include the possibility that the state can buy back shares to gain a majority in BCR again and then sell it to a strategic investor when markets improve. Under the initial privatization strategy, Romania was to sell 51.8 percent in BCR to a strategic investor, 10 percent to the IFC and EBRD and 8 percent to the bank’s employees. Five local investment companies hold around 6 percent each in BCR. 18,000 layoffs Under a $396 million accord with the IMF, Romania has pledged to lay off around 18,000 workers at troubled state firms by September, to make them more attractive to investors. «We have six months to either privatize or liquidate these companies,» Musetescu told a news conference. «The government understood that. Rather than prolong their agony, it has to find a solution.» Jobs will be lost at 22 state companies whose debts to the state and to suppliers amount to a total of 18 trillion lei ($547.2 million). Steel wire maker Industria Sarmei, which was also on the list, will not ax jobs because it was sold yesterday to Conares Trading AG Switzerland for 27.2 million euros ($29.32 million). Conares pledged to keep all the 5,600 employees for five years. Most jobs will be axed at truck maker Roman Brasov and tractor maker Tractorul Brasov with 3,000 layoffs each, and troubled steel mills Resita and Siderurgica Hunedoara with a combined 4,850 workers to be laid off. «Roman, with over 8,000 employees, produced 600 trucks last year,» Musetescu said. «For it to be profitable, 4,000 people should be making 3,000 trucks.» Musetescu said losses at Tractorul Brasov are around 2 billion lei ($60,800) per day. He said workers will get between 15-17 months of income, totaling 1.5 trillion lei ($45.60 million). The IMF has said the severance payments will not affect Romania’s budget deficit target, which is 2.65 percent of gross domestic product this year.