The privatisation committee for Casa de Economii si Consemnatiuni, The Romanian Savings Bank (CEC), headed by a Finance Ministry official, decided to begin talks with investment bank JP Morgan with a view to continuing using it as consultant of the Romanian State in next year's privatisation.
However, sources close to the talks say reaching this stage of the contract does not necessarily mean the contract will be closed. "If direct negotiations fail due to differences over the privatisation formula, the Commission will start talks with the next best bank in terms of financial offer," sources said.
The World Bank, which is closely monitoring the privatisation process, has agreed to the start of the negotiations with JP Morgan over the final version of the contract.
Citigroup Global Markets and Credit Suisse First Boston also submitted bids in the final race for advisory services, in which selection is based on financial bids.
Banking sources say JP Morgan asked for a retainer of only $200,000, which was much lower than the amounts of over $500,000 asked for by Citibank and CSFB.
Besides paying its own experts, the bank will have to use part of the retainer to pay the other companies it has teamed up with, such as London-based law firm Linklaters, the investment fund Romanian American Enterprise Fund and a real estate consultant.
The schedule agreed upon with the World Bank would involve the consultant devising the CEC sale strategy to be ready by February 2005. The Government needs to endorse the privatisation strategy by the end of March 2005 at the latest, and the whole process should be finalised by the end of 2005.
As things stand now, the Romanian State is likely to get a very good price for CEC, as competition among potential buyers appears to be strong.
T
