Austrian investments on the go this year

Celebrating its National Day on 26 October, Austria is an old friend of Romania and its second largest foreign investor. The economic bonds between the countries are tight, the diplomatic link is growing due to new common projects, while investors seem to be positive about their development. Alexandra Cioboata talks to the Austrian Ambassador, Gerhard Reiweger, and top players to find what is left to capitalise on

2016-10-22 08:35:36 - From the Print Edition

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Austria is a constant investor and one of the most active in Romania, ranking second after the Netherlands in terms of direct investment value, amounting to around 9.7 billion Euro (16.1 per cent of total FDI) at the end of 2014. Austrian investors often say that the Romanian market has great potential because of its dynamism and skilled labour force, with companies benefiting from competitive advantages for production due to comparatively lower factory costs. Romania′s economic high growth rate, which showed a 5.2 per cent rise in H1, and the Government′s willingness to strengthen stability both in the political area and the economic framework also seem to have increased the attractiveness of the country.

At the end of January 2016, 7,060 companies with Austrian capital were registered in Romania, a few hundred more than in January 2014. With a strong background and long-term commitment on the local market, Austrian companies can be found in almost all fields of the Romanian economy. They are particularly strong in banking and insurance, with companies such as Banca Comerciala Romana (BCR), a member of Erste Group, Uniqa and Vienna Insurance Group, in real estate - Immofinanz, logistics - Gebruder Weiss, as well as in oil and gas, OMV Petrom, the largest oil and gas group in South-eastern Europe, investing more than 12 billion Euro in Romania since 2005. In addition, Austrian key players are also active in environmental technology and services, agriculture, construction material and services, wood processing, packaging, transport and retail.

However, the bond between Romania and Austria is best described by the Ambassador of Austria in Romania, Gerhard Reiweger, who conveys that their relationship is multi-faceted. He notes that, as partners in the European Union, the countries are working together in a variety of fields that are interlinked. This year, for instance, Romania and Austria started a new project within the framework of the EU′s Danube Strategy concerning public administration training. This project involves both political decision makers and education institutions of both countries and will also potentially have a positive impact on economic cooperation, according to the Austrian Ambassador.

"We have a close cooperation concerning the improvement of professional education and training in this country and there is a project to establish an Austrian school," the Ambassador tells The Diplomat - Bucharest. "We are also working on a number of projects aimed at intensifying our relation at a regional level. These projects include, amongst others, political visits, cultural events, city partnerships, education cooperation, infrastructure investments, and the development of tourism."
The Ambassador goes on to add that, in order to further strengthen the Romanian-Austrian link, a third Honorary Consulate of Austria has been opened in Constanta this year, following the model of the other two located in Timisoara and Sibiu.

"Austrian investors look for long-term opportunities and not short term profits"

The value of the bilateral trade between Romania and Austria was around 3.8 billion Euro at the end of 2015, of which 1.37 billion Euro were exports and 2.42 billion Euro imports. Romania′s main exports to Austria are electronics, electronic goods, machinery and mechanical appliances, shoes, furniture, wood and timber products. Romania′s main imports from Austria are machinery and appliances, vehicles and components, consumer products, medical and pharmaceutical products and industry supplies.

The figures for the first quarter of 2016 show a ten per cent increase in the volume of trade, according to the Austrian Embassy data. "This trend looks strong and sustainable and we expect the annual growth to come close to this figure," adds the Ambassador.
Nevertheless, the latest statistics by BNR (Romania′s Central Bank) in terms of FDI are from the end of 2014 and show a 15 per cent decrease compared to previous year. Thus, the Austrian direct investment value on the local market amounted to around 9.7 billion Euro (16.1 per cent of total FDI) at the end of 2014, down from 11.4 billion Euro (19.1 per cent of total FDI) at the end of 2013. The main reason why the investment figure dropped is that two Austrian retail groups sold their local investment, namely BauMax and GoodMills Group, and one Austrian-owned bank - Volksbank - was sold.

However, according to the Austrian Ambassador, the FDI inflow from Austria will keep on coming, as he sees continuing interest by Austria companies to invest in Romania.
"Austrian investors always came to Romania with a long-term vision," he says. "They steadily built up their market position and will not give this up easily. Austrian investors still see big market potential in Romania, they look for long-term opportunities and not short-term profits. Austrian investments are here to stay."

The Ambassador also adds that besides the positive outlook of the Romanian market, Austrian investors still face some bottlenecks that can hinder their proper development. Thus, the companies often complain about complicated administrative procedures, frequent and unpredictable changes of the legal environment and lack of human resources.

"One difficulty some firms encounter is finding employees with proper qualifications," he says. "In order to remedy this situation the Economic Office of the Embassy facilitated cooperation projects between Austrian companies and professional schools in Bucharest and Cluj-Napoca in order to train retail sales staff and metal workers respectively."

Next, The Diplomat - Bucharest talks to major Austrian players active on the local market to find out how they are faring so far in 2016, what their main expectations are for the year end, and how they see the development of the industries in which they are active.

OMV Petrom CFO: "Only a stable regulatory environment can create a win-win situation for people, society and companies"

In the European Union, energy security is becoming more important. Romania enjoys a relatively high level of independence: only 13 per cent of the energy consumption needs to be imported compared to an average of 57 per cent in the European Union, according to Eurostat. Andreas Matje, the CFO of OMV Petrom, the largest oil and gas group in South-eastern Europe, expects that the currently drafted National Energy Strategy will provide a general framework to maintain or even expand the level of energy security, e.g. by investment in the Black Sea.

"The energy sector requires annual investments of four-five billion Euro, out of which one-two billion Euro would need to be allocated to the Upstream sector," Matje tells The Diplomat - Bucharest. "Given the long term nature of investments in the energy sector only a stable, predictable and investment-friendly fiscal and regulatory environment, supporting the targets of the energy strategy, can create a win-win situation for people and society as well as companies."

Matje adds that in Romania, the Upstream sector is characterised by mature fields, which need ongoing investments. Reducing investments leads to lower levels of production and that′s what he saw in the first half of 2016 when substantially lower investments lead to a three per cent decline in OMV′s oil and gas production volumes. "To support investments, a number of countries such as United Kingdom, Italy, Germany, Ukraine, Kazakhstan and China reduced Upstream-specific taxes," he adds.

Whereas the market for fuel products recovered and the demand for power is broadly stable, although the high share of renewable energy creates its own dynamics, the CFO of OMV Petrom expects the gas market to become more challenging. National gas consumption decreased by around 17 per cent during 2010-2015, he says, mainly due to lower demand from the industry. In 2015, Romania reached the point where it almost didn′t need to import gas anymore. In this context, Matje confesses that any further decline of the gas consumption in Romania leads to excess production which cannot be sold by exporting to neighbouring countries due to infrastructure related constraints. "We at OMV Petrom have not been there yet, but if worse comes to worst, we might be required to consider closing down gas wells," he adds.

Another challenge stressed by the CFO is related to gas prices: international gas prices decreased substantially in the beginning of the year and recently led to increasing imports. In this respect, he notes that national producers are disadvantaged by the supplementary taxation of additional gas revenues, which was introduced at the beginning of 2013, when gas prices started to be liberalized.
"Since then, around 60 per cent of the additional gas revenues achieved (actual average gas price achieved minus reference price, which was set early 2013) are taxed away," he says. "The minimum average gas price regulated by this taxation amounts to 72 RON /MWh. As a result, in case the average price actually achieved falls below this threshold, domestic producers have to pay taxes on revenues which were not realized in the market. Traders importing gas are not subject to this taxation and consequently do not face such risk."

In the first half of 2016, the difficult market environment adversely impacted OMV Petrom′s financial results, and more than compensated the effects from improved operational performance as well as strict cost discipline and cash management. Still, OMV Petrom managed to post a positive net income for the first half of 2016, of 405 million RON (more than 91 million Euro).

Despite the fact that the company reduced investments by 35 per cent in H1 2016 compared to H1 2015, OMV Petrom remains one of the largest investors in Romania. The company′s investments for the first half of 2016 amount to almost 300 million Euro and it expects investments on the order of 700 million Euro for the full year.

"The challenging market environment resulted in deteriorated project economics," says Matje. "Consequently, in order to continue creating value rather than destroying it, quite a number of investment projects - mainly in Upstream - had to be cancelled or needs a fundamental redesign to become financially feasible again. But the Capex decrease also reflects the completion of Neptun Deep exploration drilling campaign, which started in the second half of 2014 and was completed in the first weeks of January 2016."

OMV Petrom is the largest integrated oil and gas group in South-eastern Europe, with an annual oil and gas production of around 65 million boe in 2015.

Immofinanz, to focus on retail and office sectors

The last few years have consistently shown that Romania′s economy has the momentum to offer a favourable long term environment for investors, in all sectors, according to Sorin Visoianu, country manager operations Romania at Immofinanz, one of the leading real-estate developers and investors in Romania. He tells The Diplomat - Bucharest that Romania gradually confirms its potential and benefits from significant exports to Germany and other Western European countries, and therefore he believes Austrian investors, among others, will continue to see it as a long-term market for their business.

"The legislative environment does indeed have a direct influence on our business and projects, which is true for the majority of economic sectors," says Visoianu. "One thing that remains unchanged is the fact that, the more stable a country′s legislative and fiscal environments, the easier it is for investors to plan their strategies, and the better it will be in the long term for that country."

Immofinanz is looking forward to continuing the on-going investments in their portfolio and they are expecting even more results from what has been done so far. Their biggest current project is in the office sector, Metroffice, which should be realized as the first part of a long-term master plan. This involves the redesign of the entire area within Immofinanz′s Iride Business Park, the largest business park in Bucharest with around 93,000 sqm, into the future Iride City. The Metroffice office complex covers three buildings, with a rentable surface totalling around 40,000 sqm. The first section counts nearly 20,000 sqm and is almost complete. The investment volume for the first building totals about 34 million Euro.

"Immofinanz′s global strategy implies a full optimization of our portfolio, by concentrating on our core retail and office sectors in all the countries in which we operate," adds Visoianu. "This being the case, our residential assets do not belong to our core business in the medium term, and we are analysing alternatives at the corporate level."

This financial year, Immofinanz′s operations in Romania have yielded stable results, similar to those registered in the previous year. As such, at the end of the 2015/16 financial year, rental income in Romania totalled 45.1 million Euro, which accounts for 14.3 per cent of the Group′s total rental income. The company′s Romanian operations results amounted to 37.5 million Euro in the same period. The Immofinanz properties in Romania represent 15.5 per cent of the company′s total portfolio, including 76 properties with a carrying amount of 852.5 million Euro. Immofinanz counts a rentable space in Romania of nearly 200,000 sqm in the office segment, and owns four shopping centres in Cluj-Napoca, Constanta, Baia Mare and Pitesti.

In early August this year, Immofinanz purchased a 26 per cent share of CA Immo for 604 million Euro, creating the basis for the merger of the companies into one of the leading property groups in Europe, according to a press release issued to The Diplomat.

BCR Pensii: The assets under management might exceed ten billion Euro in 2019

As Romania′s economy is growing fast, fuelled mainly by private consumption and to some extent by investments in the private sector, the Romanian private pension assets seem to follow the same trend. Thus, the assets under management have grown consistently, reaching today the equivalent of some 7.5 billion Euro. Radu Craciun, president and general manager of BCR Pensii, tells The Diplomat - Bucharest that the rising path is expected to continue in the next years as well.

"As the growth is likely to continue to accelerate, 2.5 years from now [early September], the funds might exceed ten billion Euro," says Craciun. "Since the start, the average annual return has been excellent: 9.5 per cent for the mandatory and 7.1 per cent for the voluntary private pension funds."
Craciun also notes that one of the most important legislative changes that took place lately and which has influenced the industry was the decision to increase the contribution to the mandatory private pension funds in 2016 by only 0.1 percentage points (from five per cent to 5.1 per cent) instead of a minimum 0.5 per cent as it was planned to happen. "Overall, the whole contribution time table is delayed which has a negative impact on the balance of individual accounts," he adds.

In 2015, BCR Pensii passed the break-even point and Craciun now expects to see the company′s profitability as fund manager to rise year by year. The president also reveals that, in 2017, the company should be paying the first dividends to the shareholder.

"Probably, the next business opportunity we shall be looking at will be the one offered by the private pension payment law which would require the set-up of a service line specialised in annuity payments for retired people," he says. "A business decision in this respect will be made only after the final version of the law will be approved in the Parliament, probably next year."

At the end of July 2016, BCR Pensii was managing the private pension accounts of over half a million subscribers (684,493, according to ASF data available in July 2014) through the two managed funds - Fondul de Pensii Facultative BCR Plus (Optional Pension Fund BCR Plus) and Fondul de Pensii Administrat Privat (BCR Privately Managed Pension Fund BCR) and net assets whose total value amounted to around two billion RON (more than 452 million Euro), according to ASF, quoted by the company data.

Egger: The recent legal actions will improve the activity of the wood industry

In 2015, the Romanian legislature amended the Forestry Code establishing, among others, several limitations on the transfer of ownership of forest land, use of forest land and wood exploitation. The amendment aims primarily to limit the theft and illegal harvesting of Romanian forests and to create more efficient regulations for the management of forest exploitation. Also, at the beginning of 2016 the Romanian Government made an amendment to regulate the timber price, creating conditions for a sustainable and competitive wood industry. Ioan Banciu, country manager of Egger Romania, part of the Austrian manufacturer of wood-panel products Egger Group, believes that all these legislative changes above mentioned will have a positive impact on the industry.

"The economic trends and the current climate show that in 2016 our industry will continue to grow as before the crisis started a few years ago, and the industry has now found its equilibrium," Banciu tells The Diplomat - Bucharest.

In September/October this year, Egger will inaugurate its second Timberpak recycling installation in Cluj county, as part of its environmental protection policy, says Banciu, whose aim is "the permanent optimization of the use of the raw material." Egger Timberpak takes over and processes different types of recyclable wood: damaged pallets, old furniture, scrap wood particle board, wood packaging, wood waste from construction and demolition waste, municipal wood waste, and biomass (derived from trimming green spaces). The value of the investment is more than four million Euro.

"We look forward to further strengthening and growing Egger′s operations in Romania," says the country manager. "For example, in the near future we will launch the new collection of products for interior design/furniture customers. This growth prospect will remain a focus as will our strong commitment to good sustainable development practices, continuously seeking and providing innovative solutions for our clients. Nevertheless, we are constantly thinking about ways to protect the environment and of course to get ′more from wood′."

In 2015, Egger registered a turnover of around 1.3 billion RON (more than 292 million Euro) with 775 employees. For this year, Banciu notes that the company aims to continue the sustainable development of the business and to increase in terms of performance and long-term profitability.

Weiler, Uniqa: "The insurance industry doesn′t contribute to the development of the economy as much as it could"

The Romanian market offers a series of advantages to foreign investors, being a large and an emerging market, with great economic potential. However, in terms of private insurance, Romania is a little bit behind other markets and the insurance industry does not contribute to the good development of the economy as much as it could, according to Franz Weiler, the president general manager of Austrian-based insurer Uniqa Asigurari. The insurance penetration rate in Romania′s GDP amounts only to around 1.2 per cent, one of the lowest rates within the EU.

"The Romanian market is a little bit special," Weiler tells The Diplomat - Bucharest. "You would expect in an economy where the GDP is growing that the insurance development follows the GDP. In Romania, in the last eight years, it was the contrary. Despite the fact that you had better figures in the Romanian market than in the average of the EU, the insurance market was deteriorating. (...) I think that many factors contributed to the negative development of the private insurance. There is for sure the fact that the regulator [ASF] had practically nothing regulated up to three years ago. I have to admit that the current president of the regulator [Misu Negritoiu] did a tremendous job, a lot of improvement, the market finally going in the right direction."

However, Weiler goes on to add that the results of the insurance market in Q1 were not that encouraging and they did not give him enough reason to be optimistic about the evolution of the industry by the end of the year. Nevertheless, he believes that the market will continue to consolidate itself. In addition, the European legislative programme, Solvency II, in force starting this year, will help the industry, as it is designed to strengthen the sector against all possible threats. "It will also provide enough capital so that companies will become strong enough to withstand even catastrophic scenarios," he adds.

Starting with 2015, Uniqa Asigurari decided to review its whole product portfolio and started redesigning and improving most of its products. The company reduced its exposure on the motor segment and started to emphasize other segments, namely health, life, and property in order to balance the portfolio. Thus, the company launched in October a new private health insurance product, iMed, which covers a flexible range of medical issues.

This year, the president general manager declared that the insurer has strengthened its departments, has invested in the IT system and hired many experts, especially to cope with Solvency II requirements.

In terms of business, Uniqa Asigurari recorded positive technical result in H1 compared to the same period of last year, not significant, but encouraging, notes Weiler. This year, the gross written premiums will surpass 100 million Euro (for both life and non-life), a slight growth compared to last year. "Maybe we will reach the break-even point by the end of the year," concludes Weiler. Present on the local market since 2009, Uniqa has a market share of around six per cent and is among top ten insurers in Romania.

VIG sees almost 40 per cent growth in H1 due to the motor insurance business

Vienna Insurance Group (VIG), represented by three insurance companies in the Romanian market - Omniasig, Asirom and BCR Asigurari de Viata - recorded good results on the local insurance industry, which has been difficult for a number of years. The Group companies in Romania increased premiums by 37.3 per cent in the first half of 2016, according to company data. This was primarily due to the motor insurance business, which is currently moving in a positive direction, according to Elisabeth Stadler, CEO of Vienna Insurance Group.

"Compared to the last years, with a distortive competition, I would say we are right on track now," Stadler tells The Diplomat - Bucharest. "Our Romanian companies underwent major restructuring due to the very adverse market conditions. Remaining in the motor insurance field, it is worth noting that after years of continuous decrease, we see a positive trend now. And the Romania′s insurance supervisor ASF has done a step-by-step positive setup with several measures to reach an area of stability for the Romanian insurance market. So we are nearing European standards now. We hope that it will develop further in that way. (...) Also the development of property insurance has been a driver [for the growth of the Group]."

VIG has also slightly increased its profit in Romania, profit before taxes increasing by 3.2 per cent year-on-year to 3.6 million Euro. However, the CEO reports that she is not satisfied with the combined ratio of 101 per cent, which improved again compared to the previous year, but it is still over 100 per cent. The Group has increased its market share in the first quarter of 2016 from 20.3 per cent up to 26.5 per cent. In life insurance, VIG signed an agreement at the beginning of August to acquire the Romanian company AXA Life (subject to approval by the authorities), a step that will further expand its market leadership.

"We signed the purchase agreement for AXA Life because it is an interesting portfolio for us," says Stadler. "AXA generated about 4.5 million Euro gross premium income in 2015, so this is a small portfolio compared to the whole life insurance portfolio. But we believe in the growth of life insurance business. The Romanian life insurance market grew 11 percent in 2015."

VIG′s premiums written in Romania increased by 26.2 per cent to 428.63 million Euro in 2015. As a result of increased new production, mainly due to increased average premiums in the motor business lines, a significant rise was recorded in the area of property and casualty insurance. The Group currently has around 2,000 employees in its three companies.

GW to increase by five per cent in 2016

Romania is an attractive market for foreign investors on the strength of both its growth potential and predictability of the legislative framework, according to Viorel Leca, managing director of Gebruder Weiss (GW) Romania, the local branch of Austrian-based transport and logistics provider Gebruder Weiss. He adds that there is a long tradition of commercial exchanges between Romania and Austria, considering the fact that the major investments made so far are triggering other investments. Leca also believes that the economic environment will further improve this year, mainly due to growth in consumer spending and some related segments, such as retail, transport and horeca.

In terms of GW Romania, however, the managing director mentions that the company has recorded an increase in turnover from year to year, expecting the same trend in 2016 as well. The company ended 2015 with a turnover of 47.1 million Euro and estimates a five per cent increase by the end of this year. Nevertheless, he is concerned about the availability of resources such as warehouses and trucks.

"This year we want to strengthen our position on the national market through investments in our current locations, but also in some new ones, strategically positioned across the country," Leca tells The Diplomat - Bucharest. "The medium-term strategy is to consolidate our market position and better define our position as a premium player by redefining services, considering technological development," he adds.

Furthermore, the transport and logistics provider is taking into consideration investments in IT infrastructure and additional logistics space in order to improve its customers′ experience. The company considers that infrastructure remains one of the main bottlenecks of the industry these days, stressing another challenge: customers′ requirements are changing very fast, becoming more complex and putting more pressure on quality.

Gebruder Weiss is present in Romania since 1994 through a partnership with local company Cargolog and since 2005 after buying the whole share capital of the local company, whereupon the firm was re-branded as Gebruder Weiss SRL. It has over 500 employees.

Porsche Finance Group to register increase in its volumes this year

As a mobility supplier, the activity of Porsche Finance Group (PFG) Romania, part of Austrian-based Porsche Holding, revolves around providing the full range of financing and insurance services for the holding′s car brands, namely Volkswagen, Skoda, SEAT, Audi, Volkswagen Autovehicule Comerciale, and Porsche, as well as for MAN trucks through MAN Finance. As such, in the context of the growing popularity of these brands and the growth of the auto market as a whole, the Group has registered a constant increase in its volumes this year, according to David Gedlicka, CEO of Porsche Finance Group.

"The auto market certainly plays an important role in the overall economic environment, a role which continues to increase," Gedlicka tells The Diplomat - Bucharest. "The visible growth registered by this sector on a monthly basis has certainly fuelled the car financing and insurance sectors, and the economy as a whole. We believe this trend is likely to continue in the medium term. (...) Given the current trends and fiscal relaxation, we expect to see this growing demand for car financing continue, and to constantly boost our performance in the coming period. We will also continue to focus on heavy vehicle financing and insurance, as a result of our partnership with the local MAN importer MHS Truck & Bus."

The CEO also notes that there has been a steady, visible growth in client awareness towards the financing sector, the clients becoming better and better informed. According to him, this is a clear sign that the Romanian market is following in the footsteps of Western European markets, a trend which should be supported and "nurtured" both by the authorities and by the market players. Another sign noticed by Gedlicka and which shows that the market is much more mature is the increase in client openness towards operational leasing.

"While financial leasing remains the best sold financing product in our portfolio, and the most relevant one for the auto market as a whole, we can see significant increases on the operational leasing market - an option which experiences growing popularity among companies of all sizes," he says. "Romania is a market undergoing constant evolution, both in terms of growth, and of client mentalities. As such, we expect this trend to increase over the coming years."

This year, the company places significant emphasis on digitalization throughout its business and client service processes, by investing in its IT systems and digital tools, as well as in its team′s training in this respect. Moreover, the company continues to build on its one-stop-shop concept, through which it offers the complete car financing and insurance package in the showroom.

Porsche Finance Group is present on the Romanian market since 1999, operating through five different legal entities: Porsche Leasing, which offers internal financial leasing for legal entities and private individuals, Porsche Bank, Porsche Mobility (operational leasing), Porsche Asigurari and Porsche Broker de Asigurare. Porsche Finance Group′s team remained stable in 2015, at around 160 employees.

Petrea, CEO of Agrana: "Romania has to improve in business stability and predictability"

Romania′s food industry is currently struggling with several difficulties that pose large problems to local producers, including changes in the recycling industry and legislation and changes in retail′s commercial relationship, Gabriela Petrea, CEO of Austrian-based Agrana Romania, one of the most important sugar producers on the local market, tells The Diplomat - Bucharest. According to her, all the aforementioned may lead to uncertainty and price volatility and even to bankruptcies if not smartly managed.

"As an emerging market, Romania may offer higher business growth rates, yet it has to improve in business stability and predictability," says Petrea. "The changes in the recycling industry and legislation and the changes in retail′s commercial relationship, doubled by hesitations and biased decisions, are reflected in the business′s forecast, hence inducing uncertainty and price volatility. If not smartly managed, these important changes may lead inexorably to bankruptcies, especially for small and medium enterprises, and to food price increases."

In the business year 2015/2016 (March - February), Agrana Romania recorded a turnover of 918.5 million RON (more than 206 million Euro) and had a average number of 490 employees. "Agrana continues to invest in developing its business, to building a strong position in the CEE countries and perfecting our products," says Petrea. "We will continue to work on honing our competitiveness and distribution networks. Moreover, we are focusing on maximising the efficiency of sugar production through rationalisation, reduction of energy costs and increase of yields," she concludes.

Gutiu, Schoenherr si Asociatii: "The economic growth came with some risks in terms of macroeconomics"

What keeps most foreign investors in Romania is the fact that the economy is stable, the political level is stable as well and, overall, the country is one of the most hospitable business partners in the region, according to Sebastian Gutiu, managing partner, Schoenherr si Asociatii. He also notes that Austrian investors show foresight and a solid long-term strategy, implemented in the early stages of Romania′s economic development, now being leaders on some of the most important market segments. However, regarding Romania′s current economic increase, the managing partner confesses that it came with certain risks in terms of macroeconomics.

"The economy is facing some challenges right now," Gutiu tells The Diplomat - Bucharest. "There has been economic growth indeed, but this evolution came with some considerable risks in terms of macroeconomics. The main growth stimulators, so far, have been an increase in consumption and a relaxation of taxation, but it remains to be seen if and how these measures will stay in place in the near future."

Gutiu goes on to analyse Romania′s recent legislative measures, adding that the legal change with a most considerable impact on the business community came with the amendment of the Fiscal Code, implemented in the beginning of this year. "Other legislative ′tweaks′ have also impacted the activity of the business community, especially in banking, insurance and retail, but the ′storm′ has not yet passed and it is too soon to discuss a clear picture of the business ecosystem," he says.
Last year and this year, Schoenherr si Asociatii has been involved in a series of very large projects. Last year, two major projects were the sale of Volksbank Romania to Banca Transilvania, in which the law firm has worked with Volksbank Austria, and several sales of non-performing loan portfolios unfolded by Banca Comerciala Romana, its client.

This year, among the major projects in which the firm has been involved there is the takeover of insurer AXA Life by its client, the Vienna Insurance Group (VIG), and the takeover of dairy processor Albalact by French group Lactalis, its client.

"Throughout the year, we have maintained the very important relationships we have with our key clients and we have sought new clients on economic segments where we feel our expertise adds value," says Gutiu. "In terms of structure, our client portfolio is mostly the same at the core, while its outline is constantly changing in shape, as transactions, disputes, investments and legal amendments come to pass in the economy."

Since the beginning of the year, the firm has promoted two partners, Adina Jivan and Emeric Domokos-Hancu. Schoenherr si Asociatii currently has 50 fee-earners, including 13 partners, and the number refers to lawyers as well as tax specialists.
Contributing editor: Petre Barac