Radu Hanga, BVB: “We want to simplify the access of retail clients to the capital market”

“I have to say 2020 was quite a good year for us. We went through the shock of the pandemic in the first part of the year, when we saw the market going down 30-40 percent. But at the end of the year, we recovered most of the losses recorded in the first part of the impact of the pandemic,” Radu Hanga, president of the Bucharest Stock Exchange (BVB) said during the Financial Forum 2021 organized by The Diplomat-Bucharest.

“We had a good period with liquidity at an extraordinary level. It was a historical high in terms of daily turnover at the Bucharest Stock Exchange. We saw a record increase in the number of investors during the year, we didn’t see any negative impact in March-April, but exactly the opposite. We saw people rushing to the market, opening accounts, taking advantage of the low prices.

If we look at the whole year, the market recovered most of the losses. If we look at the current figures, we have a 14 percent growth since the beginning of the year and if we look at the last 12 months, we have a growth of around 40 percent.

We saw also an increasing interest from the companies for financing through the capital market. Banks have accumulated in the last year significant amounts of money. Retail deposits in banks have grown by 10 to 15 percent yearly in the last 6-7 years. I think now we are above 260 billion RON deposits in banks, and the loans to deposits ratio is at historical low.

What’s happening now in the capital market is prerequisite for the growth of the banking sector. Banks are looking for solvable clients, clients who have access to capital.

We are offering local companies access to required capital, which make them eligible for bank lending. What we see in the last 2 years, looking from the beginning of 2019, are 47 rounds of debt financing totalling 2.4 billion Euro. We saw ten companies accessing AeRO market with a market cap of 200 million Euro. Out of that 10 listings, 6 happened in the first three months of this year, so we see an accelerating trend.

If we look at the bond issues and the equity issues, we had 15 rounds of financing since the beginning of the year and other 3 issues coming from the State.

We announced at the beginning of the year that we expect at least 20 listings for 2021. We are now just four months in the year and we are close to that target. We see that the pipeline is building, and we see more and more companies expressing their interest and working in different stages to access the capital market.

We need to keep increase the liquidity at market level and that’s why we are working for the central counterparty project. We need more issuers coming to the Stock Exchange, now we see a lot of small companies accessing the alternative market AeRO. We also need 2-3 big names coming to market and we are in contact with most significant companies in Romania in order to consider listing to the Bucharest Stock Exchange. We have discussions with the State regarding the listing of state-owned companies, including Hidroelectrica.

We are improving the market conditions; we are working with brokers as market makers in order to increase the liquidity for the companies which are already listed and we do see things improving from this perspective.

We are working with the Financial Supervisory Authority and the Ministry of Finance in order to build a strategy for the development of the capital market to have a long-term path for developing the ecosystem. We also want to simplify the access of retail clients to the capital market because that’s the most important thing, to make the best connection between the companies which are requiring capital and the available local capital. In order to have retail clients, it’s important to give them information about the companies which are listed. We just launched a platform; we are financing brokerage houses to better cover the research of listed companies. Clients need quality information about the companies they are investing in. We are pushing forward with the market-making programs for the issuers, central counterparty project.

We are looking at the pension reform and I’m pretty sure it will be included in the capital market strategy. It’s about incentivizing somehow the long-term investments from the retail investors. This is also a strong signal from the State which is encouraging investments in local companies.”

The Diplomat Bucharest organized Financial Forum event in online format, on April 21,2021. The conference joined leaders spearheading digital initiatives in their organizations in to offer insights into their digital transformation journey’s in fintech & banking, as well in capital markets and insurance.

The fast evolution of digital in all industries mirrors in the behaviours and innovations brought by banks,  financial institutions to meet the clients’ needs to abstain from overspending, navigate risks, and usually deal with their finances better. FinTech services and products are more and more designed for particular functions inside the financial ecosystem and customization is key to win more clients and portfolios.