Business Review

Several foreign banks active in Romania have been through tough times lately on their home markets, owing to the financial crisis. Business Review looks at the biggest banks in the Romanian system in terms of assets, and highlights their evolution in their home markets.

The lack of data on how markets will evolve in 2009 is making it hard for companies to come up with budget forecasts. Some are playing the waiting game, putting off drafting plans for this year until after the first quarter, while others are drawing up alternative versions of their budget. In Romania, firms are monitoring costs, and say they will carry on investing, but are still waiting for sufficient data to make firm plans.

Healthcare services, often in demand during recessionary times, are suffering from the ups and downs of the EUR/RON exchange rate, which affects equipment producers as well. Companies that are protected by being part of bigger groups have things slightly easier, but all are very cost aware.

The financial storm starting to take its toll on the local private sector will have more far-reaching effects. Private companies, a significant contributor to non-governmental organizations, are likely to reduce funding. Consequently, projects could face a cash shortfall and NGOs may need to restrain the scope of their programs. Most are already thinking of solutions to cover the gap.

Now is the first real chance for local companies to actively participate in Emissions Trading since Romania joined the EU in 2007. The price of a credit, which had dropped from highs near EUR 30 per EUA to under EUR 1 in 2007, has regained some ground, and is now about EUR 15. But Phase 2 (2008-2012) of the EU ETS brings good news for some industries and bad news for others. Chief among the discontented are local energy companies that last year received insufficient allocations and now find themselves needing to buy credits on the market.

Romanian lawyers specializing in litigation and insolvency know the time has come for their departments to bring some healthy business to their firms, after witnessing real estate departments thriving for the last two years. Insolvency houses are looking at increasing revenues from the growing volumes of restructuring cases and eventually bankruptcies that are expected to happen next year in Romania. The financial crisis and companies' failure to react to the changing business environment mean that insolvency and distressed M&As will take center stage next year.

With Christmas and New Year's Eve holidays planned well ahead, Romanians are now not much more than a week away from departure to their chosen destinations. These include countries such as Austria, Italy, France, Belgium, Cyprus and Spain, but also more exotic climes such as Hurghada and Sharm El Sheik, as tourists inject more revenues into the accounts of airlines and travel agents. But the outlook is not as sunny for next year, when the crisis may stem the tide of generous profits for these players, especially on the corporate travel side.

Business Review canvassed the leading market players, asking whether risk management has been properly applied within the regional companies active in Romania or whether it is only now getting the attention it deserves.

The energy sector has seen four major joint ventures and just one significant conventional M&A transaction this year. The collaborations inked in 2008 bring the total investment in energy production units up to some EUR 6.9 billion.

The third edition of the Luxury Show opened its gates last week to a wealthy public looking for bling-bling and all things luxury. This year is expected to be healthy for sales and visitor numbers, even in the context of the financial crisis. Undaunted by the negative prognosis, players in this industry say there will always be a segment of luxury consumers and expect to be little, if at all, scathed by the current economic woes.