Tuesday, 24 June 2008

RenCap doubles employee levels

Financial News

Jason Corcoran in Moscow and Tara Loader Wilkinson
23 June 2008

Russian investment bank Renaissance Capital has more than doubled its workforce over the past 18 months and is still hiring, while many of its rivals have been cutting jobs to save costs.

Staff numbers at the bank, which specialises in emerging markets including Russia and sub-Saharan Africa, have grown from 500 at the start of last year to about 1,200 as of last week.

The bank said: “We have identified huge opportunities to create value in a range of frontier markets around the world, and that has led us to recruit talented people to pursue those opportunities and meet our aggressive targets. We have grown rapidly in the past year or two, against a backdrop of downsizing by many of our competitors.”

The bank is opening a distribution hub in Singapore and has hired Merrill Lynch’s former head of Asian equities, Martin Gillott, to run it. The operation will act as a distribution base for Renaissance Group products, focusing on institutional securities and international equity sales.

Renaissance, which was founded 13 years ago, joins Russian rivals Troika Dialog and VTB Bank in setting up operations in Singapore and trying to develop links with its investment institutions there.

The bank is also applying to Singapore’s regulator for a banking licence and may extend the office’s remit depending on demand.

Gillott, who joins Renaissance as managing director and head of distribution Asia, quit Merrill Lynch last year and returned to London.

The bank recently launched an operation in Dubai for the roll-out and development of investment banking and asset gathering activities in the Middle East. It also has distribution hubs in London and New York.

Renaissance last week advertised to hire directors, vice-presidents, associates and senior analysts in investment banking, for positions based in Moscow and Kiev, in Almaty, Kazakhstan, and in Lagos, Nigeria.

Renaissance declined to say how many staff it was looking to hire.

Lombard Odier hires Russian wealth executive

Financial News

Jason Corcoran
24 June 2008

Renaissance Investment Management's leading wealth management executive is leaving the Russian fund manager to join Swiss private bank Lombard Odier Darier Hentsch in Geneva.

Alexander Kotchoubey, who joined Renaissance Investment Management as wealth management head and deputy chief executive, is the fourth senior executive to leave the Moscow firm in six months and follows the departure of its president Ilkka Salonen in May, chief investment officer Daniel Broby in March and the head of its Swiss operation Philippe Magistretti last December.

Kotchoubey will join Lombard Odier in the next couple of weeks as head of international development for Russia and Eastern Europe.

He said: "We are in the process of building a team for the region based in Geneva. Lombard Odier recognises the opportunities of expanding its franchises in emerging markets. They have a very aggressive view of how they want to expand."

Prior to joining Renaissance, Kotchoubey was head of the investment strategy team within Merrill Lynch Investment Wealth Management & Insurance unit in New York. An American with Russian heritage, he also worked as a director at Medley Global Advisors and spent a decade at Brown Brothers Harriman in New York.

His arrival at Lombard follows the failure of Renaissance to develop a Swiss base for Russian high net worth clients.

Magistretti, head former head private banking at Swiss bank Union Bancaire Privée, was hired to run the business but left after less than a year in charge.

A senior Renaissance source said the Swiss business did not build the wealth unit fast enough and that Kotchoubey's departure was unrelated.

Renaissance Investment Management, the funds arm of Renaissance Capital, was set up it in 2003. It has more than $6bn in assets under management with the majority representing of funds belonging to Russian high net worth clients.

Russia’s stocks rally as Putin passes the presidency to Medvedev

Financial News

Jason Corcoran in Moscow
23 June 2008

Investment climate is steady as new leader continues reform agenda

Russia’s equity markets are enjoying the country’s honeymoon period under its new leadership, but investors remain wary of how the power-sharing arrangement will evolve.

The changing of the guard on May 7 saw Vladimir Putin hand over the presidential mantle to his protégé Dmitry Medvedev. Within hours, Medvedev had nominated his mentor Putin as Prime Minister.

The smooth choreography proved to be a fillip for Russia’s main stock markets and sparked a buying spree by foreign funds.

The MSCI Russia Index was the best performing emerging equity market last month, rising 15.7%, and outperforming the MSCI EM Emea index, which rose 7.3% in the same month. Inflows recorded in the third week of May of $542m (€350m) were the highest in Russia for more than two years, according to data provider Emerging Portfolio Fund Research.

Peter Halloran, chief executive of Russian hedge fund group Pharos Financial, said: “So far, their partnership has been smooth. There has been no discord and they are moving ahead with the reform agenda, which is the trick with emerging markets. It will take at least a year if we are going to see any friction between the two.”

Most investors agree the new order has yet to result in any tangible change to the investment climate due to the continuity in policies and the Government’s team.

Putin unveiled his new cabinet, handing key roles to heavyweight economic liberals, while keeping several hardliners with a secret services background on board.

Yulia Tseplayeva, chief economist at Merrill Lynch in Russia, said the early running indicated Putin was focusing on geopolitics while Medvedev was taking care of institution-building.

She said: “The transfer from Putin to Medvedev hasn’t taken place yet. It’s been a transfer from Putin to Putin-Medvedev. Putin is the main decision-maker and his significant presence is very obvious through the mass media, and the public doesn’t see any difference. It’s essentially the same team, the same policies without any major revisions.”

The best-performing sector over the past month has easily been energy, which was fired up by Putin’s statement that the tax regime in the oil sector would be eased by August. Russian Energy giants Rosneft, Surgutneftegaz, Lukoil, Gazpomneft, Transneft and Novatek rallied by between 23% and 26% last month, after the sector had failed to be swept up by the boom in global oil prices.

Tseplayeva added: “The Government could no longer afford to ignore the oil lobby as its main taxpayer. The plan to cut mineral extraction taxes for the oil sector was announced a year ago but Putin dressed it up in a very investor-friendly way and the markets responded in kind. The 100bn roubles (€2.7bn) a year will be good for the industry but it’s only 0.2% of overall GDP.”

Goldman Sachs reacted by raising its 12-month estimate for the RTS index by 12% to 2750, recommending energy blue-chips. Oil and gas stocks are expected to continue to thrive on the back of the decision to cut taxes, although it might mean other sectors have to take up the slack.

Chris Weafer, chief strategist at financial services group UralSib, believes the mining industries such as coal and metals could be most at risk. He said: “This year, there is less pressure to levy higher taxes to compensate the budget as the oil price is well above the average assumed in the budget. We believe the finance ministry could easily afford to give up $20bn to the oil industry.
“But the ministry will not want to have to bet on the oil price every year and will undoubtedly push hard for the oil tax reduction to be balanced with higher taxes on other parts of the country’s extractive industries.”

The steel sector has also been hit by suggestions the Government is considering higher export duties on steel to compensate for lost revenues from lower oil taxes.

Producers have enjoyed a surge in steel prices, pushing up costs in industries that use the metal in their production. Analysts said the losers would be companies such as Severstal, Magnitogorsk Iron & Steel Works and NLMK.

With the restructuring of the electricity grid UES almost complete, several Russian funds are betting that hydro-electricity company RusHydro will become the new proxy for the sector.

Last month, the RTS was up 15.9% while the Micex exchange’s index was ahead by 15.5%. While the lion’s share of the upside came from oil and gas, financial stocks also powered ahead with the financials index up 10.2%. Fund managers are bullish on banking blue-chips VTB and Sberbank, which have both flagged in value since their combined $18bn listings last year.

Listed construction and real estate developers have also shown signs of life after the Government approved a $570bn programme to overhaul and expand the country’s transportation infrastructure over the next seven years.

The latest GDP data shows household consumption up 13.6% in real terms during late 2007, which helps explain the continued boom in the consumer economy. Investors are keen on Russia’s second-largest retailer Magnit, which raised $490m in an April listing on the London Stock Exchange to fund expansion.

Tseplayeva said: “The consumption boom is shifting away from Moscow to regional cities such as Ekaterinburg, Novosibirsk, Krasnoyarsk and St Petersburg. Food retailers such as Magnit are primed to do well.”

All signs are that the drought of flotations experienced in the first quarter is over. Last month there was the $449m listing by freight operator Globaltrans and the $1.2bn flotation by retail group X5.
In the global capital markets, Russian companies are eyeing an expanding role. Medvedev has called on business leaders to embark on a foreign acquisition spending spree to boost technological expertise and to diversify into new markets.

Russian business conglomerate Sistema has opened its cheque book in foreign markets by taking a majority stake in Indian telecoms operator Shyam Telelink. Russian companies in the metal and steel sectors such as Severstal and Evraz have also begun to invest globally and extend their reach.

Stephen Cohen, chief executive of Troika Dialog’s fund management business, warned this trend could be to the detriment of capitalising on domestic growth. He said: “Return on equity remains high in Russia and as domestic growth remains very strong it may not be easy for Russian companies to find investment opportunities outside Russia that are as attractive as the domestic opportunities.

“Plus buying foreign companies per se does not necessarily reduce reliance on foreign technology. The solution to that problem is probably more to do with greater expenditure at home on research and development and on education and direct hiring of foreign personnel to work in Russia.”

Medvedev’s call has been answered by state-controlled companies such as savings giant Sberbank, which is looking to acquire banks in the Commonwealth of Independent States, eastern Europe and China.

Alexander Kotchoubey, managing director of Renaissance Investment Management, which has more than $6bn in assets under management, said: “Sberbank and VTB are immune to the international credit crisis because of their minimal exposure to sub-prime and they might be able to pick up distressed assets on the cheap in foreign markets.”

Alexei Miller, chief executive of state-controlled Gazprom, announced in late May that the energy giant is aiming to have the largest market capitalisation in the world. Gazprom, which recently overtook China Mobile to become the third-largest global company, is believed to be interested in taking control of TNK-BP, the Anglo-Russian venture.

TNK-BP’s Russian shareholders are embroiled in an ownership dispute with their British counterparts, which analysts say has been caused by Kremlin pressure on both groups to sell out to a state-controlled company. Investors believe events surrounding TNK and Shell’s surrender last year of the Sakhalin-2 project contribute to the wariness among European and US legislators about Russian investment in their countries.

Weafer said in a note: “Prime Minister Putin late last year said the Government believes approximately $50bn of potential Russian investment into Europe is being blocked because of these worries.”

At the economic forum showcase in St Petersburg at the beginning of June, investors were looking for specifics on how the Government plans to progress reforms and investment plans declared before the parliamentary and presidential elections.

Kotchoubey said: “There hasn’t been a clear delineation of how power should be shared between Putin and Medvedev. Investors are aware that the immaculately turned out double-headed eagle hasn’t had its feathers preened yet.”

Wednesday, 18 June 2008

Russian banks caught in talent war

Financial News

Jason Corcoran in Moscow

16 June 2008

A dwindling stock of investment bankers and growing demand for talent is driving the latest hiring merry-go-round in Russia’s capital markets.

Competition between bulge brackets and domestic banks has been exacerbated by Russia’s VTB moving into investment banking. The state-controlled bank has hired 60 bankers from Deutsche Bank and the German institution has in turn responded by hiring analysts and bankers from US and European banking rivals in Moscow, including Citigroup, UniCredit, UBS and ING.

Dmitry Vinogradov, head of research, strategy and banking at Citigroup in Moscow, has moved to UBS and co-head of equity research Mikhail Selezenev and equity sales director Sergei Suverov have left to join Deutsche Bank.

This follows the departure in February of Citigroup’s former Russia country head Stuart Harley, who set up the bank’s Russian business in 2004 and is on a sabbatical. He was asked to relocate full-time to Moscow from London last year but declined.

Nick Harwood, head of equities for central and eastern Europe, the Middle East and Africa at Citigroup, said the bank had increased its Moscow staff despite a number of defections.

It has hired John Heisel as an equity sales trader, Elina Ribakova as an economist, oil analyst Ildar Khaziev and Konstantin Korotich as chief administrative officer of Russian equities.

A Citigroup spokesman said: “Russia remains our biggest equities business in Ceema which we will continue to invest in. Prospects for the remainder of the year look good with a strong equity capital markets pipeline in particular.”

Italian banking group UniCredit, which acquired Russian brokerage Aton 18 months ago, has hired an executive director from Goldman Sachs to co-head its investment banking business with Alexander Kandel. Amiran Kanchaveli previously worked at ABN AMRO alongside the Prime Minister of Georgia, Vladimir Gurgenidze.

UniCredit is shaking up its Moscow business following its acquisition of Aton. A senior source said half of the bankers from its debt and credit team would be let go and 20 middle and back-office staff would be cut.

Russia’s capital markets have been largely insulated from the global credit crunch. A total of 306 M&A deals worth $51.3bn have been conducted this year, according to data provider Thomson Reuters. That represented an increase on the same period last year when 301 deals worth $46bn were conducted.

M&A has filled the void left by ECM, where just seven deals worth $2.23bn occurred in the first half of this year compared to 20 deals worth $22bn last year.

In debt capital markets, there were 23 issues worth $11.4bn in the first six months compared to 49 issues worth $22.5bn last year.

Russian investment funds have also benefited from the turmoil in developed markets. Russian funds have this year reported inflows of $2.7bn.

UralSib chief strategist Chris Weafer said: “Along with the $1bn invested through December last year, the total amount invested in Russia since the start of the election cycle on December 2 is $3.7bn. That compares with only $300m taken into these funds through the first 11 months of last year.”

Russian system is on borrowed time

Financial News

Jason Corcoran in Moscow

16 June 2008

The Russian securities market has attracted substantial inflows from western investors in the past few years but the infrastructure to support the growth is only slowly catching up.

The average daily volume of transactions of Russian stocks stands at $6.1bn (€3.9bn), which includes $5bn traded on domestic stock exchanges with the remainder traded on foreign exchanges, according to investment bank Troika Dialog.

Investors have recognised some improvements over the past few years, but still regard dealing in Russian securities as a transaction, settlement and custody risk.

Most Russian investment offerings to non-Russian investors are domiciled in the Cayman Islands or in Guernsey, and often administered in Ireland. Global custodian State Street administers Prosperity Capital and Hermitage Capital, the two largest equity funds investing into Russia, from Dublin.

Damian McEvoy, associate vice-president at State Street’s subsidiary Investors Trust Europe, said: “Any initial scepticism about investing in such funds is unfounded, as all investors must go through rigorous anti-money laundering checks before being allowed to subscribe to these funds.

“But clearing and settlement standards have some way to go before reaching international benchmarks. Investors in Russian securities are typically only permitted to redeem on a monthly basis, and can sometimes have their redemption payments delayed due to the corresponding delay in the settlement of the underlying security sales.”

Hedge fund Hermitage, which has scaled down its activities in Moscow, has experienced considerable delays in the transfer of funds within Russia, the conversion of roubles into other currencies and the remittance of monies outside of Russia.

It said: “Delays may occur in the collection of dividends, proceeds of sales, redemption monies and other cash sums, possibly causing currency exchange loss, and some monies may not be received. In addition, due to the local postal and banking systems, it cannot be guaranteed that all entitlements attached to securities acquired by the fund, including in relation to dividends, can be realised.”

Most custodians point to the lack of a central depository, the numerous registrars and the need to register securities physically as the market’s most glaring inefficiencies.

Ramy Bourgi, head of emerging markets development at Société Générale Securities Services, said: “There is a record of the system working since the 1998 crash but it is not the most efficient from an operational point of view. It would benefit from a central depository and if there were not as many as 76 registrars.”

Legislation proposed by the Russian regulator two years ago to create a central depository was never passed in Russia’s parliament. Industry sources said settlement services provider Euroclear was approached by the regulator to be an adviser and create such a depository but that a final contract was never signed.

Stephen Cohen, chief executive of Troika Dialog’s hedge fund business, said: “It is a creaking system. Settlement can suffer from long delays when you use local registrars and their custody costs can be higher than in other markets.”

Troika’s $150m Cayman-registered Russian hedge fund uses Deutsche Bank as a prime broker and Deutsche Bank uses a network of sub-custodians in Russia.

A large amount of trading in Russian shares still occurs outside the country – in US or global depositary receipts with settlement in US dollars – but Russia is moving to repatriate this activity. That would require greater direct foreign investment in Russian equities, which has been erratic due to poor infrastructure and investor sentiment.

Some custodians, such as Northern Trust, have so far opted to steer clear of Russia because of the high proportion of captive non-state pension funds.

A Northern Trust spokeswoman said: “Russia is not a country in which we are really involved, and neither are we looking at it at the moment. There are apparently few pension fund assets in Russia. As serving pension funds – asset management and asset servicing – is one of the main parts of our business, there are fewer opportunities for Northern Trust. The main asset owners in Russia are the banks, and it is not a sector we are chasing at the moment.”

Acquisition of Russian banks by foreign organisations is seen increasingly as important for entering the competitive domestic custody market.

UniCredit is a leading sub-custodian in the Russian market through its ownership of International Moscow Bank, which was acquired by the Italian group’s Bank Austria Creditanstalt subsidiary in January 2007.

UniCredit, which also acquired Russian brokerage Aton Capital last year, sees Citigroup and ING as its main rivals.

Meanwhile Société Générale is hoping that increasing its stake in local bank Rosbank to 50% this year will allow it to become one of the dominant participants in domestic investor services and business coming in and out of Russia. The French bank paid $1.7bn for a 30% share of Rosbank, in addition to the 20% it already owns.

Bourgi said: “Russia is our top priority for Eastern Europe and Rosbank has a good domestic client base with $25bn in assets. Our job is to work with Rosbank to raise services to international standards and to serve existing clients.”

Bourgi, who joined SG in September last year with a mandate to develop the bank’s capability in emerging markets, said global custodians need a presence on the ground with local expertise.

“You cannot offer direct custody without being in the market. We go where clients want to go and Russia is an up-and-coming market,” he said.

Rosbank’s clients include many high-profile corporates that are beginning to branch out in international markets.

Consequently, Bourgi believes the domestic market is as attractive as the in-bound investor segment, if not more. He said: “When our Russian clients go international we will be able to capture their out-bound fund administration and custody needs.”

Information service Lipper Feri’s figures show that investments by European equity funds investing in the CEE – defined as Russia, Eastern Europe, the Baltic states and Turkey – rose from €5.3bn ($8.4bn) in 2002 to €38.6bn in July 2007. Much of that spurt is attributed to the growing interest in Russia.

While aspects of Russia’s capital markets have developed apace, its infrastructure is clearly lagging.

Tuesday, 10 June 2008

VTB recruits 20 for sovereign wealth unit

Financial News

Jason Corcoran in Moscow

09 June 2008

Russian state-controlled bank VTB has created a dedicated unit of 20 bankers to act as a conduit for sovereign wealth funds looking to tap the global capital markets.

Ivan Ivanchenko, who has joined VTB from Deutsche Bank’s global markets team, is in charge of building the operation and developing links to sovereign wealth funds in the Middle East and Asia.

The operation is expected to be involved in managing a large amount of Russia’s $32.6bn (€21bn) National Prosperity Fund, which is scheduled to begin investing in foreign stocks and corporate bonds from October.

Ivanchenko said: “The sovereign funds and their counterparties are considering big allocations to Russian corporations. So far, we have 20 staff involved from sales and trading, research and global markets but it is a floating number and in the set-up stage.”

Sovereign wealth funds hold $2 trillion in assets globally, and are forecast to grow sixfold by 2015.
Goldman Sachs and Morgan Stanley have moved staff to the Middle East to target funds based in the region.

Barclays Capital named Gay Huey Evans, formerly a top banker in Citigroup’s alternative investments division, to a new post in March covering sovereign wealth funds.

Ivanchenko said Temasek, Singapore’s $100bn sovereign wealth fund, is closing in on investments in Russian energy and the infrastructure sectors.

While on a business trip to Singapore, he said: “Temasek’s previous experience of investing in Russian IPOs was mixed and they want to outsource investments to firms that can manage PR and overcome any local difficulties and prejudices that might exist.”

VTB is establishing investment banking hubs in Moscow, London, and Singapore and has recently recruited 60 bankers from Deutsche Bank.

It has hired Timofey Demchenko from Deutsche Bank to run its private equity and special situations department, along with Dmitry Skryabin as head of energy and utilities research from Aton Capital, the Russian banking business of Italy’s UniCredit.

Russian Finance Minister Alexei Kudrin has backed VTB’s bid to manage the National Prosperity Fund, which was spun off from its main oil stabilisation fund in January.


Cool wind blows through the Baltics

Financial News

Jason Corcoran in Moscow
09 June 2008

Swedish manager sees opportunities in downturn
A marked slowdown in the Baltic economies has cooled the interest of many investors, but others continue to sense opportunities.

Swedish fund manager East Capital Asset Management hopes to raise €150m ($232m) for a fund with a 20% exposure to the three former Soviet republics of Latvia, Lithuania and Estonia, to add to its €4.4bn of assets under management. Its Bering New Europe fund will invest in small to mid-sized companies in the central European and Baltic markets.

Managers at East Capital believe the sharp adjustment has spawned companies with attractive valuations. East Capital director Andras Szalkai said: “We see good growth and limited risk for central Europe and the Baltics that we want to mirror in our fund. The global market situation has created many investment opportunities.”

He acknowledged there had been a slowdown in the Baltics, which he said was caused by several Scandinavian banks reining in their credit lines. This led to a decline in real estate and construction, and a drop in retail sales across the region.

The three republics joined the European Union in 2004 and experienced a consumer boom that drove a surge in economic growth. But the double-digit growth of the past three years has fuelled inflation and driven current account deficits to record levels. Credit conditions have tightened and interest rates have risen sharply.

Edgars Makarovs, head of portfolio management at Parex Asset Management, based in Riga, Latvia, said international investors had long since left the market, which he said was illiquid and difficult to operate in.

He said: “There are cheap and attractive valuations but the financial results of these companies have not been promising enough to make you want to invest. I think things are getting worse and not everyone understands the severity.”

Parex, which has $1.2bn (€780m) in funds under management, has shorn its exposure to Baltic equities to a minimum. However, its Baltic opportunities fund is fully invested in the three states and has fallen in value by 30% over the past year.

Makarovs said: “This fund has just about matched the benchmark. The stock market index in Riga is down 24% over the year, Estonia is down 35% and Lithuania is off by 12%.

With equities depressed, Parex has bought into local fixed-income bonds, where yields are between 10% and 12%. Makarovs anticipates being underweight in local equities for another six months at least and overweight in the more under-developed economies of central Asia and Ukraine.

Parex has also established a distressed property fund to capitalise on the 20% to 30% slide in residential real estate prices over the past year. The fund plans to raise €25m to buy real estate from owners in financial trouble.

Estonian banks and pension schemes have invested in 400m kroon (€21m) of local junk bonds issued mainly by real estate developers and loan providers. The move by the pension schemes caused a stir.

The Tallinn Stock Exchange had refused to list the bond issue of one real estate developer because of the high risk of defaulting, while another property development that issued a bond was found to have sold its main assets and is now practically worthless.

Sven Kunsing, head of East European investments of North European financial group SEB, said fund managers were aware of the risk and were keeping their share of junk bonds to a minimum in their portfolios. In a note, he said the media was focusing too much on such problem investments. He said: “Do you want us to stop investing altogether?”

Carmelina Carluzzo, an economist at UniCredit, said gross domestic product figures for the first quarter of this year indicated that central European countries, such as Slovakia, Czech Republic and Hungary, had proved more resilient to the global credit squeeze than their EU cousins in the Baltics.

She said: “Estonia, with an expansion in gross domestic product of only 0.4% in the first quarter, emerged as the slowest-growing economy in the EU, while Latvia’s growth decelerated to 3.6% from 8% in the fourth quarter. A slightly better outcome was recorded by Lithuania, whose GDP growth decelerated to 6.4% from 8% in the previous quarter.

“However, given the marked slowdown of the two other Baltic countries, a further cooling of Lithuanian growth can be expected in the next quarters.”

Inflation will continue to be the main concern for investors. Latvia has been one of the fastest-growing economies in Europe, but the boom appears to have been checked by inflation, which reached a 12-year high of 17.5% in April. Inflation in Estonia and Lithuania stands at 11.4% and 11.7%, respectively.

All three countries had hoped to adopt the euro soon after joining the EU in 2004 with the incentive of €124bn in convergence funds to drive them on. But a resurgence of inflation has pushed these plans back to 2010 at the earliest.

East Capital is continuing with its fund launch despite these doubts. Marcus Svedberg, chief economist at East Capital, said the high economic growth of recent years in the Baltics was not sustainable, so it was inevitable that a period of adjustment would come.

He said: “There is a marked slowdown occurring due to the build-up of imbalances, with widening current account deficits and inflation. We are now seeing an adjustment exacerbated by the global slowdown.”

Svedberg said the Baltics had begun correcting last year before other emerging markets and were further into the cycle. He said wages were rising rapidly to keep pace with inflation.

“If the Baltic economies grow by 3% to 4% over the next couple of years, it will still be a good performance compared with forecasts of 1% to 2% for the eurozone and 0.5% for the US,” he said.
“Adoption of the euro being delayed by a few years does not concern me as long as accession is on the agenda.

“The convergence criteria were not set up with fast-growing emerging markets in mind but rather for larger, more slowly growing, mature economies."