ECONOMY

Greek firms among leaders in foreign investment in Romania

Greece’s business presence in Romania is growing promisingly, with all sizes of firms covering a wide range of activities. Romania, in fact, is now considered the first option for Greek direct investment capital. With low labor costs, growth rates of gross national product higher than 4 percent, a rapid de-escalation of inflation (now below 20 percent), improving macroeconomic indicators, relatively reliable administrative services, a strengthened political position on the international scene and, particularly, the prospect of European Union accession as of 2007, Romania is considered to have the most interesting business outlook among the other southeastern European countries by far. The advantages seem to be so strong that they outweigh the problems, such as currency risk, legal confusion and tax difficulties. Naturally, international investment interest is growing. Greek firms, however, seem to be leading the way. Bank officials take the view that if account is also taken of both direct and indirect (through offshore companies) investment, and the re-investment of profits, Greek firms invest more than any other country in Romania. In any case, they are definitely in one of the top three positions and the sum of invested capital is estimated at nearly 3 billion euros. The first important Greek investment in Romania was that by Alpha Bank in 1994, when it founded Banc Bucuresti, renamed six years later as Alpha Bank Romania. Today it has 17 branches, with plans for more and expansion into more sectors, such as leasing. But the biggest Greek investment in Romanian banking today is that of EFG Eurobank Ergasias, which acquired a 19.25 percent stake in Banc Post in 2000. It recently raised its interest to 53 percent and is making ambitious plans for growth. Banc Post is one of Romania’s largest private banks, with a network of about 150 branches. Piraeus Bank also has an important presence through Peter Bank (a 20-million-euro investment) and a fast-growing presence in the leasing sector. Egnatia and Emporiki banks have smaller interests. The National Bank of Greece is a latecomer – earlier this month, it announced the acquisition of 81.6 percent of Banca Romaneasca, with immediate plans for expanding the network to 40 branches. Among the pioneers of Greek investment in Romania are packaging and strapping materials firm M. Maillis and the Delta dairy group. Maillis made the first moves in 1994 and Maillis Romania now has a large plant outside Bucharest; it is listed on the city’s stock exchange. Delta Ice Cream started commercial operations in 1997. It now has production plants and its 18,000 sales points account for more than 50 percent of market share. The biggest of all Greek investments – which is turning out to be a liability – was that of OTE Telecom, which in December 1998 acquired 35 percent of Romtelecom (with an option for a further 16 percent) for 650 million euros. OTE now holds a 54 percent interest in Romtelecom and its total investment is now approaching 1 billion euros – the country’s eighth largest. OTE last week announced it is abandoning its mobile subsidiary Cosmorom. Snacks maker Chipita has built a new modern plant and has a strong presence. Papastratos tobacco has a plant, while Coca-Cola HBC has subsidiaries making everything from fridges to bottle tops. Earlier this month, Loulis Mills inaugurated an ultra-modern plant which gives it a leading position in flour production in Southeast Europe. IT and mobile telephony retailer Germanos has developed a network of 65 branches and has plans for further growth. The Fourlis electrical appliances retailing group expects earnings of about 2 million euros this year and is soon to open sports gear shops. Global Finance runs two portfolio investment funds, the Black Sea Fund (with capital of 100 million euros) and Global Growth Fund (20 million). Telecoms equipment and software group Intracom has also invested a great deal in Romania, apparently creating a foothold for the long haul. Construction company Pantechniki recently announced plans for a 120-million-euro investment in a shopping mall in Bucharest. Other construction groups are closely following developments in real estate. Yesterday, the Marinopoulos retailing group announced the opening of the second Marks & Spencer store in Bucharest. The group represents the UK-based firm in Greece.