ROMANIA - A MARKET OF CHOICE -

1. ROMANIA - A MARKET OF CHOICE -

2. ROMANIA: OVERVIEW • Romania applied in 1995 to join the EU and was admitted on 1 January 2007. • EU rules have been fully adopted in Romania in fields such as: • corporate governance; • banking; • insurance; • financial services; • accounting; • Competition. • The energy, telecom, and transportation sectors are also significantly opened to free competition. • Romania expects to be able to join the exchange rate mechanism (ERM II) around 2012: • aiming to join the euro-zone in 2014. Population: 21.5 mln. 238,000 square km

3. ROMANIA: ECONOMY GDP GROWTH • 2000 – 2008: Romania experienced 9 consecutive years of economic growth. • During 2001 – 2008, domestic demand has been the main growth factor: • the adoption of the 16% flat rate of tax on profits and income (in 2005) stimulated the final consumption. • Net exports made a negative contribution to real GDP growth: • as a consequence of higher goods and services imports, due mainly to strong dependency on the energy sector, raw materials and capital imports. • Financial crisis and deterioration in international conditions change the positive course of Romanian economy: • Q1, 2009: GDP decreased by 6,4%; • it is expected a “V” shape recession. ? % Sources: NBR and Eurostat

4. ROMANIA: ECONOMY • During transition (started in 1990), the structure of the Romanian economy has changed significantly: • the restructuring of industry led to a reduction in its contribution to GDP from about 40% in 1990 to less than 27% at the end of 1990s; • after 2000, the structural decline halted and the contribution to GDP made by industry growth stabilised (23% in 2008). • Shift from industry and agriculture to services: • services sector has increased its contribution to GDP from 26.5% in 1990 to almost 50% in 2008; • services sectors heavily concentrated in Bucharest. • Construction has recorded growth rates higher than GDP growth rates in the last years. 2008: STRUCTURE OF GDP BY SECTORS Source: INS

5. ROMANIA: CURRENT ACCOUNT CURRENT ACCOUNT DEFICIT/GDP • During 2002 – 2008, both exports and imports increased: • the faster move in imports led to an increase in trade deficit as a share in GDP. • In 2008, the balance-of-payments current account posted a deficit of EUR 16,877 million: • 1.2 percent higher than in 2007; • export growth outpaced import growth by 4.4 percentage points; • current account deficit decreased in 2008 to about 12.3 %; • in 2009, the current account deficit is expected to be less than 10%. • In 2008, non-residents' foreign direct investment in Romania worth EUR 9 billions (as compared with EUR 7.2 in 2007): • covered 53.5 percent of the current account deficit in 2008 (compared with 43.5 percent in 2007). 2000 2001 2002 2003 2004 2005 2006 2007 2008 % Sources: NBR

6. ROMANIA: MONETARY SYSTEM CPI • National Bank of Romania (NBR) is the central bank of Romania: • its main objective is to maintain overall price stability. • In 2005, inflation targeting was officially adopted as a NBR”s monetary strategy. • Continuing disinflation, which began in 2000, came to a halt in the third quarter of 2007. • Due to domestic adverse events and exogenous factors, NBR has been forced to operate changes in its monetary policy: • reference interest rate; • RMO. % Sources: NBR and INS

7. ROMANIA: MONETARY POLICY REFERENCE INTEREST RATE • Starting with 2004, NBR gradually reduced interest rate with the intention of achieving a sustainable slowdown of inflation: • extended minimum reserve requirements; • introduced other prudential and administrative measures (loan-to-income limits for household borrowing). • From the second part of 2007, demand–pull inflationary pressure forced NBR to raise again the interest rate: • seven consecutive time increase brings interest rate above 10%. • In 2008 Q4, economic growth slowed down sharply owing to the rapidly expanding fallout from the global crisis on the Romanian economy via the foreigntrade and financial channels: • NBR decided to lower the monetary policy rate by 25 bps to 10 percent (in February) and by another 50 bps in May; • minimum reserve ratio on foreign-denominated liabilities with residual maturities of over two years was cut to zero from 40 percent. % 2002 Jun. 2009 Sources: NBR

8. ROMANIA: EXCHANGE RATE POLICY RON/EUR EXCHANGE RATE • One of the main tasks of the NBR is to define and implement the monetary policy and the exchange rate policy: • the exchange rate regime: managed float; • allows for a flexible policy response to unpredicted shocks likely to affect the economy. • In anticipation of capital account liberalization (in April 2005 non-residents were granted access to RON term deposits), the Romania Leu started to appreciate against all major foreign currencies: • despite NBR continued to intervene in the FX market, RON/EUR exchange rate reached the bottom of 3.12. • The trajectory of RON/EUR rate reversed at the end of July 2007: • shift in investor appetite for riskier assets, prompted by international financial crisis; • RON was under pressure at the end of 2008 – beginning of 2009; • Changes in FX market made necessarily the Romanian – IMF Agreement. Feb. 2002 Jun. 2009 Sources: NBR

9. ROMANIA – IMF STAND-BY ARRANGEMENT • On March 25, 2009 Romania's Government signed a letter of intent for about €20bln loan package led by the International Monetary Fund (IMF): • the IMF will lend Romania €12.9bln; • €5bln will come from the European Union. • the World Bank will lend between €1bln and €1.5bln; • the remainder will come from other international organisations, including the European Bank for Reconstruction and Development. • Main actions part of the Stand-by Arrangement: • maintain a strong capitalization of the banking system on the medium term: • banks are required to secure by 30 September 2009 sufficient resources to ensure solvency ratios above 10%. • improve the capacity to respond in a timely and effective fashion in the event of bank distress; • ensure the confidence in the banking system; • continuously improve the supervision and regulation framework; • promote some measures to ease the debt servicing by borrowers during the crisis.

10. ROMANIA – IMF STAND-BY ARRANGEMENT • On March 26 in Vienna, the parent banks of the nine largest foreign banks (from Austria, Greece, France and Italy) operating in Romania have committed to: • maintain their overall exposure to Romania; • increase the capital of their subsidiaries, if needed. • After the meeting in Vienna, the NBR has conducted stress tests of Romanian banks: • results confirms that banks are well capitalized and have high liquidity buffers. • On May 19 in Brussels, in a coordination meeting, the parent banks of the nine largest foreign banks incorporated in Romania reaffirmed the commitments to take action needed to support their subsidiaries in the country. • These commitments, along with the balance of payments support package, will help Romania's banking system to: • weather the current crisis better; • restore investor confidence; • return the economy to a sustainable growth path.

11. ROMANIA: CAPITAL MARKET CNVM - Romanian SEC - • The first post-1989 securities law, (Law no. 52/1994) was passed by Parliament in 1994: • under the provision of this law, the National Securities Commission (“CNVM”) was established. • In 2004, a new law regarding Romanian capital market was taken into force - The Capital Market Law No. 297/2004: • it transposed in the Romanian legislation de provisions of the EU Directives regarding capital market. • The Bucharest Stock Exchange (BVB) was set up on 21st April 1995 as a public entity that is effectively managed by its members through the Stock Exchange Association: • on January 10, 2005 BVB changed its legal status into a joint stock company; • the transformation of legal status has permitted the merger of BVB with the Rasdaq Electronic Exchange (BER), a process which has been wound up on November 30, 2005; • BVB is today the unique regulated market in Romania where are traded equities and bonds: • There is another regulated market in Romania (Sibex) where are traded just derivatives products. BVB - market operator - ARENA Trading System PIATA RASDAQ 1.662 companies PIATA REGLEMENTATA Cat. I 21 Cat. II 47 Cat. III 1 Cat. Int. 1 allotment certificates equities bonds rights futures 71 members

12. ROMANIA: BUCHAREST STOCK EXCHANGE • The main conditions for being listed in first tier of BVB are as follows: • at least three years of operation; • equity capital of lei equivalent of more than Euro 8 millions; • a minimum net profit for the last two years of operation (excluding financial revenues); • management performance and integrity; • adequate working capital; • 25% of their capital is to be offered to the public. • The BVB markets are opened for trading in every working day, from 9:30 to 16:30. • The clearing and settlement of the trades concluded on the BVB markets are performed by the Romanian Central Securities Depository (Depozitarul Central): • settlement cycle for all trades concluded at the BVB is “T+3”; • delivery versus payment, based on BIS Model 2 - cash is being settled first by multilateral netting, followed immediately by transfer of securities; • all securities traded on the BVB are registered in the book-entry form.

13. ROMANIA: BUCHAREST STOCK EXCHANGE BVB: MARKET CAPITALIZATION • Market capitalization decreased its weight in GDP from about 28% in 2007 to less than 10% at the end of 2008. • From the beginning of 2008 till today, 13 new companies were listed on the BVB regulated market: • only 5 companies have been listed following an IPO: • financial turmoil discouraged few other companies to start listing procedures. - other 8 companies came to BVB regulated market from Rasdaq. • The BVB market capitalization is highly concentrated: • Top 10 companies represents about 85% from total market capitalization. • The most important company listed o the BVB regulated market is Petrom (SNP): • EUR 3,5 bln. market value; • SNP gives about 1/3 from BVB total market capitalization (excluding EBS). bln. EUR * Jun 2009

14. ROMANIA: BUCHAREST STOCK EXCHANGE PETROM (SNP) • Petrom is one of the largest oil and gas producer in South Eastern Europe, with activities in exploration, production, refining and distribution. • Petrom has a maximum refining capacity of 8 million metric tons per year. • 550 filling stations in Romania and 269 filling stations in Moldova, Bulgaria and Serbia. • In 2008, the turnover of the company was EUR 4,552 mln.: • EBITDA was EUR 969 million. • Key ratios (source: Reuters): • return on equity (%): 7.53; • total assets/equity: 1.84; • price to book: 1.07. • Petrom was privatized in 2004, when OMV AKTIENGESELLSCHAFT WIEN became the majority shareholder: • OMV: 51.02%; • Romanian Ministry of Economy: 20.63; • “Proprietatea Fund”: 20.11%; • Others: 8,24%. RON 2007 Jun. 2009

15. ROMANIA: BUCHAREST STOCK EXCHANGE BVB: DAILY TURNOVER • Increase in risk aversion kept some investors away from equities market: • bonds market increased its relative importance on the BVB once G-bonds were admitted to trading (late 2008). • The first foreign company listed on the BVB succeeded to draw local investors’ attention: • EBS has about 3,5% in total turnover. • The main reason for decrease in market liquidity was the less active presence of foreign investors. • The market liquidity is also very concentrated: • TOP 10 generates about 85% from total turnover. • The companies from financial sector are the most liquid in the market: • the five SIF’s that are listed on the BVB give more than 40% from total turnover. mln. EUR * Jun 2009

16. ROMANIA: BUCHAREST STOCK EXCHANGE SIF’s SHARES • SIF’s are companies that were set up in the early 1990’s as vehicles of privatization. • In accordance with the law regarding the privatization of commercial companies, five Private Ownership Funds (POFs) were established: • each POF was allocated 30% of the share capital in Romanian companies. • In 1996, the POFs were transformed into investment companies (SIFs) and were organized as a joint stock companies: • SIFs are now classified in the category Other Undertaking for Collective Investments (AOPC). • Free float of each SIF: 100%. • Holding threshold - 1% of the share capital of the SIFs: • the exercise of the voting right is suspended for the shares held by the shareholders that exceed the limit. RON 2007 Jun. 2009

17. BVB: CHANGES IN THE INVESTORS’ BEHAVIOR • FACTS: • Interest rates were sharply increased: • - to keep savings in a banking account • became more attractive. • Local investors have today • the possibility to chose any EU • regulated market to invest in: • there are more than 600 foreign • investment firm registered to • Romanian SEC; • - there are some local brokers that are • present on the international market. • MiFID removed the “concentration rule” for all capital markets in the region: • there are already OTC trade with • shares listed on the BVB; • - a regional MTF could be just a matter • of time. DIVERSIFY THE OFFER! HOW BVB SHOULD REACT TO THIS SHIFT IN INVESTORS BEHAVIOR? STIMULATE THE DEMAND! ENHANCE THE INFRASTRUCTURE!

18. BVB: DIVERSIFY THE OFFER • Attract new issuers: • working with de Government to do not abort the privatization program through capital market due to financial turmoil; • working with private companies to list their shares: • BVB could become an example once it will become a public company. • foreign companies: • EBS revealed that local investors are interested in shares issued by the most companies in the region • Bring different financial instruments on the same infrastructure: • shares; • bonds; • derivatives. • “Fondul Proprietatea” could be also one of the companies that we expect to be listed in the short/medium term.

19. “FONDUL PROPRIETATEA” • “Fondul Proprietatea” was incorporated in 2006. Purpose: • provide the financial resources necessary to grant compensation to persons entitled to receive it in relation to assets that cannot be restituted in kind. • The initial share capital of “Fondul Proprietatea” is RON 4.24 bln.: • assets contributing towards the share capital of the fund are mainly represented by stocks held in various national entities and companies. • Initially, Ministry of Finance was the unique shareholder of “Fondul Proprietatea”: • the MoF decreased the stock it holds in the share capital of “Fondul Proprietatea” by the assignment of its shares in favor of the people to be compensated. • “Fondul Proprietatea” operates based on the general principle applicable to the organization and operation of a closed investment company: • portfolio management will be performed by an international organization well-known in the active management field; • selection process is on roll.

20. THANK YOU FOR YOUR ATTENTION!