WASHINGTON, D.C./BUCHAREST, June 8, 2004 — The International
Finance Corporation, the private sector arm of the World Bank Group, today
announced the disbursement of $111 million for a 12.5 percent, plus one
share, equity stake in Banca Comerciala Romana (BCR), in advance of its
impending privatization. The announcement was made after major improvements
in BCR’s corporate governance.
In US dollar terms, the disbursement represents IFC’s largest-ever single
equity investment in a bank. IFC’s stake in BCR has been purchased directly
from the Romanian government. Concurrently, the European Bank for Reconstruction
and Development (EBRD) has also disbursed the Euro equivalent of $111 million
for an identical equity stake in BCR. BCR is Romania’s largest bank in
terms of assets, with a customer base of nearly 4 million.
IFC, together with EBRD, has spearheaded major changes in corporate governance
at BCR to prepare it for privatization, bringing the bank into line with
EU standards. In addition to giving assurance to potential strategic investors,
the corporate governance improvements at BCR will provide a model of good
practice for local financial institutions and other firms to copy, aiding
Romania in its accession to the EU.
Key to the corporate governance overhaul is the adoption of an European-style
two-tiered board structure at BCR. An independent supervisory board, composed
entirely of non-executives of the bank, has been established to oversee
a management board of senior executives responsible for the daily operations
of the bank. As an essential step towards bringing risk management practices
into line with Bank for International Settlements guidelines, BCR’s supervisory
board created an audit and compliance committee.
In addition, a compensation committee was formed to help ensure that the
interests of senior management, employees, and shareholders are well aligned.
IFC and EBRD organized a training program in Spring 2004 for BCR’s supervisory
board and management board members to prepare them to carry out their duties
under the new governance structure.
Peter Woicke, IFC Executive Vice President, said, “I am particularly pleased
that IFC, along with EBRD, is helping improve BCR’s corporate governance
structure. The new, modern system of checks and balances will catalyze
increased investor interest and improve the terms and conditions for the
Note to Editors: For background information on IFC’s investments in
Banca Comerciala Romana, see IFC press releases,
and EBRD Take Joint 25 Percent Stake in Romania's Largest Bank”,
and of “IFC
Provides $75 million, Seven-Year Loan to BCR”.
The mission of IFC (www.ifc.org)
is to promote sustainable private sector investment in developing countries,
helping to reduce poverty and improve people's lives. IFC finances private
sector investments in the developing world, mobilizes capital in the international
financial markets, helps clients improve social and environmental sustainability,
and provides technical assistance and advice to governments and businesses.
From its founding in 1956 through FY03, IFC has committed more than $37
billion of its own funds and arranged $22 billion in syndications for 2,990
companies in 140 developing countries. IFC's worldwide committed portfolio
as of FY03 was $16.8 billion for its own account and $6.6 billion held
for participants in loan syndications.