Business Review

Last month alone, two major strikes shrunk the profits of two of the biggest companies in Romania: Galati-based Arcelor Mittal and the Dacia plant in Mioveni. Both were hailed as privatization triumphs, and both have lost hundreds of million euros on account of wage clashes going on for days and even weeks.

The deadline for filing Romanian personal income tax returns for the 2007 tax year is 15 May 2008. The annual tax return has to be filed by all resident individuals who derive income (other than employment income) from Romania or from abroad. Up to this year, the rule was applicable only to Romanian nationals, because non-Romanian individuals benefited from a special exemption provided under the Fiscal Code.

In incipient markets where people still carry pockets of cash around, credit cards are developing at sky-high rates, but from a ground-floor level. On the Romanian market banks seem to be stuck in the co-branded mode, having issued more than 780,000 such cards in 2007, namely 60 percent of the total number of credit cards at the end of 2006 - 1.29 million. However, that does not mean lenders have exhausted the market's potential.

Just like any other important decline on the local capital market, the one we are currently witnessing started off shyly, giving the impression that it is merely a temporary correction and shares will go back on their usual upward trend in a short while. The term “crisis” was firmly rebuffed by everybody, especially after last year's growth the growth raised investors’ hopes once again.

The recipe to go from the little banking league to the middle league or higher is, evidently, to grow. The sector’s most rapid climbers last year, Volksbank, Credit Europe Bank and Piraeus Bank, took a two-fold approach to growth. First of all, they expanded organically. Secondly, they tried to find something each of them could do best.

National and trans-border takeovers have been around for awhile, but lately the upset on international markets and JP Morgan’s bargain deal on Bear Stearns last week have turned M&As into even more spectacular and drama-filled events. During the past months, the subprime crisis had contrasting effects on banks’ takeover appetite in the CEE, the U.S. and in Romania.

Companies like Rompetrol, ArcelorMittal and AlroSlatina have opened the way for a wave of local hedgers concerned about safeguarding their money from currency rate fluctuations. For accuracy's sake, we are not talking about a wave the size of a tsunami, but a trend is definitely forming.

Ten years ago the banking system was totally different. It has changed beyond recognition and only people that were active in the system at that time can appreciate the changes that have taken place since then. Today we can say that we have a fully functional banking system, with reliable banks that are under effective supervision and provide services and credits to those who need them on the basis of objective criteria.

When I arrived in Bucharest at the end of 1999, the city was looking grey and uninviting, totally different from my first fact-finding mission in August that year. In the summer of 99 it was around 40 degrees centigrade and the asphalt on the streets was melting.

Romania was not affected by the US subprime crisis and may face only limited second-round effects, said analysts from Erste Bank in their latest study.