Penny Market, the biggest discount chain in Romania, held by German group Rewe, posted a 4.3% sales rise last year, to over 380 million euros, according to ZF calculations based on data in the annual report of the German group. Penny Market's results round up the list of trade market leaders (Metro Cash&Carry, Carrefour - hypermarkets and Mega Image - supermarkets), which mentioned the performance of the Romanian market in their reports. France's Carrefour, the biggest player in modern retail, saw its Romanian business slip 0.44% last year, while the sales performance of Metro Cash&Carry, the biggest player in modern trade, "was markedly weaker," according to data in the group's report. On the other hand, Penny Market and Mega Image (the most extensive supermarket chain) reported sales increases, though with the help of new stores.
Romanian sales of Penny Market fared the best in the region, considering that the German discount division fell 1.2% last year and the Czech division went up 3.8%. (Z.F.)

Staple foods became 20 to 40% more expensive between July 2010 and February 2011, shows the Z.F. index calculated based on prices in Bucharest hypermarkets. ZF selected 15 products whose price it has been following since 2008, once every six months, at the same Bucharest hypermarkets, Carrefour Orhideea and Real Afi Cotroceni. These products were chosen because they are most often to be found in Romanians' purchase basket. (Z.F.)

In the calculation of this index, ZF chose one brand from each category of products, a brand that is well positioned in terms of market share, produced by one of the top-five players in the category. Therefore, one kilo of Băneasa flour costs 2.8 lei in February, 41.4% more than in July 2010. 1 Kilo of Lemarco sugar now costs 4.295 lei, compared with 3.28 lei, an increase of 30.9%. Similarly, the price of Floriol vegetable oil (1 litre) rose over 35%, from 5.11 lei to 6.91 lei. Data from the National Statistics Institute (INS) point to a 10.2% price increase for flour in the July 2010 - January 2011 period. Similarly, the increase amounted to 8.1% for sugar. The only products whose prices fell, of those analysed by ZF, were beer, mineral water, apples, with the decline amounting to 6.1%, 0.1% and 12.4% respectively.

Consumer lenders and leasing firms lost 27,000 clients last year, namely a fifth of the number of clients they had in late 2009, as the number of newly-sealed contracts was much smaller than the number of maturing ones.
Non-banking financial institutions (NBFIs) in late 2010 had approximately 112,000 clients left, with the sums these owe standing at 19.7bn RON (4.6bn euros), down 4bn RON (around 960m euros) from the same period of 2009, in line with NBR data.
"The number of clients and the value of funding decreased last year mainly on the prolonged economic downturn and the implementation of Ordinance 50 on consumer loans. (...)," stated Răzvan Diaconescu, general manager of Impuls Leasing.
The number of loans granted and of commitments made by the NBFIs saw an even steeper decline, with over 64,000 contracts ended last year without being replaced by new ones. Many leasing contracts were terminated before maturity because clients no longer paid their monthly instalments and creditors repossessed the financed goods in order to resell them later.
However, leasing companies expect things to improve partially this year.
"My estimates are that the leasing market ended last year somewhere around 1bn euros, but in 2011 we may see a 20-30% plus if economic growth expectations materialise," says Felix Daniliuc, general manager of Raiffeisen Leasing.
In 2008, the market had climbed to 4.8bn euros.

The ninth arrangement that Romania is preparing to sign with the IMF next month kicks off with a rather vague agenda, less ambitious than the preceding letters of intent which, in fact, were left with some unmet targets every time. According to the letter of intent obtained by Mediafax, the problem of the arrears accumulated by the big state companies - the chapter of the current arrangement where Romania has fallen behind the most, is discussed in a paragraph in which the Government announces the shift of financial control from the respective ministries to the Finance Ministry. In addition, the régies and the companies subordinated to the local authorities will report financial indicators on a quarterly basis to the Finance Ministry, but there are no means of penalising slippages, if they continued to occur. Much more ambitious are the plans announced recently by Jeffrey Franks, chief of the IMF mission for Romania, who talked about evaluating and setting a strategy for a list of 150 state companies. But the provisions of the letter of intent published by Mediafax do not include any mention of this list. (Z.F)

Bucharest is in the middle of a ranking of Eastern European cities based on the area of vacant offices, with Budapest, for instance, having nearly twice as many empty buildings, according to ZF calculations, based on data supplied by real estate consultancy CB Richard Ellis.
Vienna and Prague also have more empty offices than Bucharest, while Warsaw has withstood the crisis better, with a lower stock of unoccupied offices than Bucharest.
Of the 2 million square metres of offices in Bucharest, around 340,000 square metres are unoccupied, with the vacancy rate seeing a major rise over the last two years, from 6.2% to 17%.
Consultants are hoping to see the vacancy rate down towards 14-15% this year, but for now around 80% of the spaces scheduled for completion this year have no tenants. (Z.F)

The Romanian National Bank has a forex reserve nearly double as high as Romania's short-term external debt, and can be considered excessive when compared with that of other central banks in the region, after having received nearly 10 billion euros from the International Monetary Fund (IMF) in the past two years via an arrangement concluded precisely out of fear that the reserve may not be high enough to cover the debt in case of an external shock. The reserve became so big that, all of a sudden, the NBR decided it no longer wanted money from the IMF, so Romania will not draw the last 1 billion-euro instalment of the loan. In other words, the loan taken out proved to be bigger than needed, especially since 3.5 billion euros went straight into the budget instead of going into the NBR's reserve. But it is still the NBR who will have to pay back the money taken out from the IMF.
"As far as forex reserves are concerned, things have been good for some time. The reserves have been kept at this level in order to calm the financial markets, which had become too jittery," comments financial analyst Aurelian Dochia. He believes aside from the high level of forex reserves, the last instalment of the IMF loan was no longer important also because economic forecasts point to an economic improvement in 2011.
The NBR reserves amounted to around 35.9 billion euros at the end of January, which includes the 3.2 billion-euro value of the 103.7 tonnes of gold.

The sheer frequency of legislative modifications in Romania, which exasperates both citizens and the business world, does not only stem from the need to change legislation after the revolution of 1989, but also from the ease with which the governments that succeeded each other during the last 20 years adopted emergency ordinances. The champion of emergency ordinances is the Cabinet of former prime minister Mugur Isărescu, who, in a single year (2000) issued 297 emergency ordinances, while in the same year Parliament adopted 683 laws, which means a total of 980 pieces of legislation. The database of the Legislative Council offers a complete picture of what happened in the legislative field over twenty years. In Romania, there are currently a huge number of pieces of legislation in force, individual and international, 95,618 on January 28, 2011, of which only 1,958 were issued before 1989. Each law needs to be abided by because one cannot cite ignorance of the existence of that piece of legislation as an excuse. The rate of legislative modifications explains the bewilderment of common people, as well as of companies and accountants, when such legislative modifications occur, and explains why lawyers and legal consultants are so successful. (Autor: Iulian Anghel Z.F.)

Romanian tax authority ANAF will refund in January value added tax to companies worth 1.36 billion lei (EUR1=RON4.2621), the highest sum returned so far in a single month, the authority said Wednesday.

Romania To Pay VAT Refunds Worth RON1.36B In January

Of the total refunds, ANAF has already paid Monday RON557 million, and will pay the rest of the sum by the end of the month. Some RON1.21 billion of the total refunds represents compensations.

In the past three years, over 52% of Fondul Poprietatea (FP) shares changed hands, according to data published by the Central Despository, with the value of transactions amounting to over 600 million euros, considering the prices thrown around the market. Transactions with Fondul Proprietatea (FP) shares boomed in the past year, after the appointment of American group Franklin Templeton as fund manager and the fund's Stock Exchange listing became a certainty. Around 30% of the shares changed hands in 2010. The estimated value of transactions, based on average prices thrown around the market, amounts to nearly 2 billion RON = over 460 million euros), accounting for 35% of the overall volume traded on the Stock Exchange. Foreign funds, SIFs (financial investment companies) and local speculators last year loaded their portfolios with Fondul Proprietatea shares, investing tens of millions of euros in the hope that the Stock Exchange listing will bring the price of shares up. For all these investors, the stake of listing Fondul Proprietatea is huge. The prices at which FP shares were traded last year fluctuated between 0.25 RON at the beginning of the year, and highs of around 0.6 RON in September, prior to dividend distribution. The fund's net asset value (NAV) is currently around 1.11 RON, according to FP reports.euro, criza datoriilor de stat, euroscepticismul, monede nationale, renuntarea la euro, salvare euro, zona euro

Real estate developers scheduled for delivery in 2011 at least eight retail projects in Romania totaling a surface of over 230,000 square meters, 17% more than the total area of projects completed in 2009, according to property analysts.

In 2009, developers completed retail projects totaling 195,000 sqm, according to CB Richard Ellis (CBRE) data.

Oradea Shopping City, Uvertura City Mall Botosani, Vitan Outlet Bucharest, Policolor Shopping Center Bucharest and Electroputere Shopping City Craiova are other projects scheduled for completion in 2011. Read more on http://www.mediafax.biz/. (Z.F.)euro, criza datoriilor de stat, euroscepticismul, monede nationale, renuntarea la euro, salvare euro, zona euro

Austria's Erste Bank has sold financial gold

BCR, the biggest domestic bank in terms of assets, is gearing up to enter the niche of gold sales to individuals, where only Greece's Piraeus is operating for the time being. Gold has this year brought a return of around 40% to investors, thus being one of the most profitable investments, just like in 2009, when it had climbed by 32%. Over the past two years, BCR, controlled by Austria's Erste Bank, has sold financial gold only to private banking clients, who have a greater financial power and are seeking ways to diversify their investments. Usually, the minimum quantity that had to be purchased stood at 5 kilos per deal, but smaller deliveries were also negotiated. As part of its new retail strategy, BCR is getting ready to sell gold bullion and coins issued by the Austrian Mint, starting from very small sizes, of just two grams, to one kilo. BCR will sell gold through certain selected branches, but Răzvan Furtună, head of the sales department of BCR Treasury, has not provided any further details for the time being.(Z.F.)euro, criza datoriilor de stat, euroscepticismul, monede nationale, renuntarea la euro, salvare euro, zona euro

Germany sees no alternative to the Euro

(Reuters) - Germany sees no alternative to the euro and Angela Merkel's government believes the best way to strengthen the currency which has helped make the German economy so competitive is closer policy convergence across Europe.
But with German public support in the balance for rescuing euro partners Greece, Ireland and possibly others, it is a tough message for the domestic audience. This explains the apparently mixed messages emerging from Berlin. Germany voices strong objections to some of the proposed solutions to the euro crisis, such as joint euro zone bonds, and Merkel's insistence on a crisis mechanism from 2013 involving private investors has upset markets.
"But in the end Germany has a vital interest in the survival of the currency union," Dekabank economist Andreas Scheuerle said. While mass-selling daily Bild runs headlines like "How Long Will the Euro Hold Out?" and some pundits suggest a north-south euro divide, the crisis seems to have hardened the German establishment's view that there is no alternative to the single currency. The government, including the sometimes fractious members of Merkel's centre-right coalition, plus the business world and the serious media are at pains to nix any talk of Germany losing its enthusiasm for the euro or returning to the deutschemark. Economy Minister Rainer Bruederle, from the Free Democrats, Merkel's often uneasy coalition partners, said on Thursday reinstating national currencies in the euro area was "not realistic". Merkel repeats that Europe's fate is inextricably tied to the currency shared by 16 countries and her comments on private investors needing to share in sovereign risk from 2013 reflect a belief that the euro will still be around. Currently enjoying a much stronger economic recovery than its partners, Germany may return to pre-crisis growth levels as early as next year, largely thanks to exports. So grumbles about the euro are slapped down with the argument that a revived deutschemark would quickly render German exports too expensive."The mark would be so overvalued against other currencies that our exports would be in trouble," said Andre Schwarz of the exporters' association BGA. "The solution is not to let the euro break up."Agerpres, Mediafax, Romanian Vancouver Sun,Global News, Financial Times,Le Monde,Tribune, ,Wall Street Journal,The Washington Times,Athens News,The New York Times,USA Today

The Irish government stood on the brink of collapse Monday

DUBLIN (Nov. 22) -- The Irish government stood on the brink of collapse Monday, a day after being forced to accept a massive bailout from the European Union and the International Monetary Fund.Irish Prime Minister Brian Cowen said he would call an election for early next year, once Ireland passes an emergency budget and finalizes the bailout.The admission represented a huge political blow to Cowen, who only days ago was denying even the need for a bailout to solve the problems brought on by Irish banks' reckless speculation in overpriced real estate.
Ireland's six banks, five of which are already nationalized or part-owned by the state, would be pruned, merged and possibly sold off."Because of the huge risks they (Irish banks) took earlier this decade, they became a huge risk not only to this state but to the eurozone as a whole," he said.Irish banks invested aggressively in runaway property markets at home and abroad. After the 2008 credit crunch sent property prices into freefall, the government tried to save the banks from bankruptcy by insuring all of their borrowings against default. That unprecedented promise - made to retain investor confidence in the country - cannot be kept without a bailout, the government has finally been forced to concede.Unions warned that overhauling the banks would mean thousands more lost jobs in Ireland, where unemployment has already reached 13.6 percent, the second-highest rate in Europe after Spain.Banca Mondiala,FMI, Guvern,agenda de business, bugetul de stat, economie, revistapresei,romania,antena3.ro,realitatea.net,mediafax,bucuresti,camera de comert

"Who knows?"

William Hague, the foreign secretary, has raised doubts about the future of the euro, saying it was impossible to know whether the currency would collapse. The Foreign Secretary, a vociferous and long-standing critic of European monetary union, said he "hoped" that the euro would survive, but added: "Who knows?" His comments came as talks continued about the possible need to bail out debt-ridden Ireland, the latest crisis-hit eurozone member. Asked whether the euro could collapse, Mr Hague told BBC Radio 4's Today programme: "Well I hope not. The Treasury has not ruled out any options for financial aid to Ireland, including the possibility of a bilateral bail-out, although that appears unlikely.
Britain would be required to guarantee up to about £6 billion of support as part of the European stability mechanism, if that option is pursued. Many Tory MPs are deeply opposed to the use of UK taxpayers' money to bail out Ireland. Earlier this week, Edward Leigh warned: "The British people want to be assured at a time when very painful cuts are being made here that good money is not being thrown after bad in driving the Irish further into the sclerotic arms of the euro which caused the problems in the first place."

"ID card-based" lending?

Bankers, who during the economic boom period lured clients with consumer loans granted upon proof of ID, have over the past two years been trying to offset the declining demand for large loans through aggressive promotional offers for credit cards, which have become the main growth driver of the retail segment overnight.
Amid the falling sales of traditional loans, could credit cards become the new form of ID card-based loans, given that as small sums are involved clients get such a product more easily?

Economists do not like such an outlook, rather viewing this as a bet on the future that could prove risky.Last year, many banks reported two-digit increases in the number of issued cards and the value of sums approved on such cards, as consumer loan portfolios shrank and housing loans were supported only by the "First Home" scheme.In 2010, card portfolios rose at a slower pace amid the prolonged recession, but promotions offers are still driving sales, even though at a slower pace. Banca Mondiala,FMI, Guvern,agenda de business, bugetul de stat, economie, revista presei,romania,antena3.ro,realitatea.net,mediafax,bucuresti,camera de comert

KPMG profits report - Romania

KPMG, one of the biggest audit and consulting companies, posted a 34 million-euro turnover in the financial year ended on September 30th 2010, slightly up against the previous year, according to Şerban Toader, the company' senior partner for Romania and the Republic of Moldova. "In a difficult economic context, our turnover continued to increase. Audit continues to be KPMG's main line of business, accounting for 55% of the turnover. Fiscal consulting services continued to rise, but the biggest share, of around 35%, was accounted for by business consulting," Toader told ZF in an interview. The data reflect consolidated revenues for all KPMG companies in Romania and the Republic of Moldova in line with international financial reporting standards (IFRS), as of September 30th 2010. In the financial year ended in September 2009, KPMG's turnover amounted to 33.3 million euros, with 58% of it being generated by audit services.

OECD - Fast growing economies

Fast-growing economies in the east should spend the vast savings accumulated through trade on their own people rather than use it to accumulate bonds and shares in the west, an influential thinktank said today.
The organisation for Economic Co-operation and Development (OECD) warned that policies designed to rebalance currencies would fail unless countries adopted more far-reaching and fundamental reforms.
The Paris-based research group, often described as the rich nations' thinktank, said in a webcast that world leaders needed to go beyond discussions about currencies at the G20 summit in South Korea next week and examine conflicts that hold back growth in the world economy.
It said: "Structural reforms, such as the strengthening of social safety nets and the development of financial markets in emerging economies, should be employed to reduce their savings and dependence on financial markets in advanced economies. The OECD sees structural reforms, such as the liberalisation of product markets, also as crucial to recover the output losses associated with the crisis and to help put public finances back on a sustainable path."
The pace of the global economy recovery had slowed since earlier this year, the OECD said, while public debt in most OECD countries was set to reach all-time highs.
"With support from fiscal stimulus fading, output and trade have softened," it said. "Average GDP growth across OECD countries is expected to be between 2.5% to 3% this year, between 2% and 2.5% in 2011 and between 2.5% and 3% in 2012. Activity is projected to vary widely across countries, particularly within the euro area.
"The US is expected to gain considerable momentum in 2012, while the Japanese recovery is expected to lose some steam. In many emerging-market economies growth is continuing robustly, although at a slightly slower pace than earlier in the recovery.
With public deficits and debt at "unsustainable levels", stabilising debt relative to GDP in most countries would require a historical consolidation effort of between 6% to 9% of GDP, said OECD secretary general Angel Gurría. "But in fact even more is needed to bring debt back to sustainable levels."
The OECD, which has promoted free trade as a route to promoting growth and easing poverty, urged the eurozone to cut taxes on employment that could reduced their ability to bring down unemployment over the next few years.
It also backed moves in the west to cut public spending as a way to "strengthen the cost-effectiveness of expenditures that enhance growth, in areas such as health care, education, innovation and infrastructure development".
Gurría said interest rates would remain at historic lows until 2012 and could be maintained at low levels if the world economy continued to struggle over the medium term.
Monetary easing by the US, the UK and Japan will brings its own problems as investors turn away from low-yielding western markets, the OECD warned. "Continued monetary easing in many advanced economies prompts capital flows to emerging economies where they risk creating asset bubbles while putting upward pressure on their exchange rates. The recent unilateral interventions in foreign exchange markets and the resulting volatility could prompt protectionist responses. Better to reach a common understanding on how global imbalances are to be reduced."

The EBRD, the biggest institutional investor in Romania, has improved its estimates on GDP growth next year, from zero in July to 0.9%. Even so, the forecast on Romania is by far the most pessimistic of all forecasts for countries in the region. For this year, the EBRD expects the economy to fall by 2%, an improvement on the previous -3% forecast.Forecasts of some analysts for next year have become pessimistic, anticipating a return to economic growth as late as in 2012. But the IMF and the government expect a 1.9% economic decline for this year, with 1.5% growth expected for next year.
Sources taking part in talks with the IMF told ZF the Fund was unofficially taking into account the risk of 2011 being the third consecutive year of recession. Officially, however, the IMF is, standing by its 1.5% forecast for 2011, which is more optimistic than the EBRD's.BCR, the biggest bank on the market, has stood by its forecast for next year, expecting a 1.2% economic growth - the lowest in the region. For this year, BCR has revised its forecast up, expecting a 2.1% GDP decline instead of the 3% contraction expected after the VAT hike to 24%. Analysts of the lending institution are thus approaching the official forecast, supported by the IMF.

The biggest Romanian-held private bank - profit.

Banca Transilvania (TLV stock exchange symbol), the biggest Romanian-held private bank, posted a 69.7 million-RON (16.3 million-euro) net profit in the first nine months of the year, 44% higher than in the similar period of last year.
In the first nine months of the year, the bank's operating revenues amounted to 1.104 billion RON, up 17% on the similar period of last year. At the end of September, the bank had a volume of loans of 13.173 billion RON, up 8% against the beginning of the year, with the biggest share (around 60%) being held by loans granted to companies.
Non-performing loans, more than 90 days overdue, account for 6.92% of the overall loan portfolio. The bank's solvency ratio is 12.33%.
"We were very careful about the provision policy and the risk management, as well as about cost control, our focus continues to be to meet 2010 targets, although another difficult period is coming," said the bank's CEO Robert Rekkers.
For this year, the bank has budgeted a 150 million-RON profit.

Recent Investments - Eastern Europe - Romania

Bancroft has acquired a significant stake in Dumagas Transport, a leading Romanian road transportation company. Dumagas Transport engages in general and specialised transportation of liquid, powder goods, and vehicles and holds a prominent position in controlled temperature warehousing and logistics.
It is the second investment in the third fund launched by Bancroft Private Equity, LLP, a Central and Eastern European, mid-market, private equity fund manager. This transaction was completed in July 2010. Bancroft will support the founding shareholders and managers as they continue developing the company’s activities across all its business lines, consolidate the group’s positions in key export markets, and speed up the development of the controlled temperature warehousing and logistics markets.