Brokerage firm SSIF Broker, which is based in Cluj-Napoca and is the largest firm of its kind not to have a bank as its principal shareholder, is intending to merge with another independent broker, Elda Invest from Galati.
On top of the fact that the two companies' core businesses complement each other, the merger will also aim to increase market share on a market where their bank-owned counterparts are gaining ground by the day. Further to this, once Romania joins the European Union, the capital market will be open to any company authorised to trade in the EU. Given the circumstances, Broker officials are also contemplating mergers with other companies.
"We have been preparing for the banks' entry on the market for years," says Petru Prunea, Broker's chairman. As of last year, banks have been allowed to operate directly on the capital market, though all of them have chosen to continue with operations through their dedicated securities firms in which they hold stakes.
The main advantages banks have over independent brokers are their much wider territorial networks and larger customer bases. BCR and HVB are now discussing integrating their brokerage firms into the banks.
The general manager of the Bucharest Stock Exchange (BSE), Stere Farmache, says the concentration on the brokerage market is a natural process and is expected to continue. "I believe it is natural that the merger process devised by the Stock Exchange through the alliance with the National Reimbursement, Clearing and Depositing Company (SNCDD) and the integration with the exchange in Sibiu is followed by concentration among brokers. I believe the process will continue in light of Romania's upcoming EU accession," Stere Farmache said.
The two companies are focusing on two different geographical areas and are targeting different types of clients.
"Our operations are complemented to an extent by those of Broker. We operate in Moldova, where Broker has a low profile. Furthermore, we rely on big clients in particular, while Broker has more discretionary accounts for smaller clients," says Adrian Manaila, the manager and main shareholder in Elda Invest.
Elda Invest's absorption may only be the first step in Broker's expansion plans. "Elda Invest is a good company and operates on a segment where we have a low profile. We are also contemplating other companies in view of mergers," said Prunea. He chose not to specify which companies Broker had in mind.
He added that the terms of the merger were under negotiation, with a decision to be made after the financial statements by the two companies for last year had been audited. The merger will enable Elda Invest shareholders to become Broker shareholders.
SSIF Broker is one of the top three securities firms on the market, while Elda Invest ranks in the middle segment of the market, which has some 70 firms.
Broker traded a value of 29.8 million euros in January and its market share reached 6.8%. It ranked first on the RASDAQ thanks to 6.7 million euros of trading.
Elda Invest ranks 33rd on the BSE, with 3.7 million euros of trading in January, and 36th on the RASDAQ with 240,000 euros. vlad.nicolaescu@zf.ro
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