A region made its citizens shareholders overnight, then lost them.
Fifteen million forgotten accounts had frozen the markets from the inside; no one had ever counted them. We did, and designed the way out.
Location / capital-markets photographyIn the 1990s, the countries of the former Eastern bloc tried to turn their citizens into capitalists overnight. Under the Mass Privatisation Programmes, every eligible person was handed shares in the state enterprises being sold off, held in an account at the national securities depository. It was meant to create a nation of shareholders. It did not: most people never traded, never voted, and in time forgot the shares were theirs.
The EBRD, working to deepen the region’s stubbornly illiquid capital markets, asked us to measure how large this dormant-account problem had grown across its markets and to design a way out: one that would reunite owners with their value, lift the servicing burden off the depositories, and let the markets finally trade.
- Desk research
- Surveys & questionnaires
- Interviewing
- Verification & triangulation
- Stakeholder validation
- Market & landscape analysis
- Liquidity analysis
- Regulatory & legal analysis
- Benchmarking
- Going-concern valuation
- Framework development
- Solution & mechanism design
- Recommendation & roadmap design
- Synthesis & report writing
- Listed / market valuation
ClientOne method. Five markets.
1 Combined across the four-country comparative study (Romania, Bulgaria, Serbia, North Macedonia: 15.3m accounts, over €8.0bn) and the Croatia study (~282,000 accounts, over €1.2bn). The Czech Republic was studied as the reference market, not counted in these totals.
2 57% of that value sat in listed securities.
The illiquidity wasn’t underdevelopment. It was an unfinished reform.
The Mass Privatisation Programmes had created the accounts but never closed the loop: no one had gone back to reunite those millions of citizens with the value sitting in their names, and so a large part of the entire free float sat in accounts that had not traded in over five years and never would.
It compounded quietly. There was no agreed definition of a ‘dormant’ account, and no one had gone to the depositories and counted, so the scale was unknown even to the people running the markets. A quarter-century-old good intention had calcified into millions of frozen accounts that no one had measured and no one had closed.
How we pulled it together
We measured what no one had measured.
The market’s central problem was that no one knew its size. There was no agreed definition of a dormant account, so we built one in consultation with participants across every market, then went to each depository and counted: 15.6 million accounts holding some €9.2 billion of citizens’ assets, a number no one had put on the problem before. We also pressed on what those holdings were really worth, running unlisted privatised businesses through our own valuation model.
We treated the market that had already tried as a warning, not a template.
The Czech Republic had already implemented a solution, and the easy move would have been to import it. So we went to the people who had run it, the depository, exchange and advisers, and asked what they would do differently. The answer was: a great deal. We took that as the region’s most useful lesson, steering the design away from mistakes already made rather than toward a precedent that had not worked.
We designed one mechanism to fit very different markets.
Five markets, five privatisation histories, five depositories. The easy path was five bespoke answers. We designed a single framework that fit them all: two pooled funds, one holding the listed securities and run like a regulated mutual fund, the other holding the unlisted and run like a private equity fund. One structure, adaptable to each market’s own law, is what let a regional problem have a regional answer.
We scored the options instead of selling one.
Rather than advocate a preferred answer, we built a viability matrix and put all three options through the same seven tests, scored on the feedback of the participants, regulators and officials who would have to live with the result. The politically obvious option, a government-funded buyout, scored just 5 out of 21 and failed. The pooled-fund solution scored 18, earned from the people who would have to run it.
What we delivered
This was one problem measured five ways, in five markets with five different privatisation histories and five different depositories. The risk in that kind of work is five different answers, each shaped by whichever local team produced it. This study was run the other way round: one method, one definition and one standard carried into every market by the same hand, which is the only reason the numbers and recommendations came out genuinely comparable.
Thierry Clarke led and did the analytical work across all five markets himself: designing the framework and the definition that made the problem measurable, running the unlisted businesses through the valuation model, sitting across the table from each depository, regulator and exchange to test what the data was really saying, and writing the diagnosis and the recommended solution. Keeping the whole diagnosis in one senior pair of hands is what held five different markets to a single standard.
Tsvetelina Zapryanova managed the coordination and liaison that a multi-market study lives or dies by, keeping the depositories, exchanges and regulators engaged and the data moving across every market at once.
Thierry Clarke
Tsvetelina Zapryanova
