Largest Romanian Bank Sold – One More to Go
And the winner is: … Erste Bank! Bucharest Daily News – December 21, 2005
by Adrian HamzescuErste Bank won the privatization process of the largest Romanian bank, with an offer of 3.75 billion euros. The losing offer and its amount will never be known.
The government sold 61.88 percent of the bank’s shares, 36.88 owned by the government and 25% owned by the
European Bank for Reconstruction and Development and the International Financial Corporation. The other shareholders are the five Financial Investment Companies (SIFs) – holding 30 percent of the bank, and the bank’s employees, holding eight percent.
The value of the transaction for BCR was estimated at 3 – 3.5 billion euros, but the authorities refused to disclose the values of the two offers prior to the final offers filed by the Austrian bank Erste Bank and Millenium – Banco Comercial Portugues.
Banco Comercial Portugues had total assets of 71.8 billion euros at the end of March 2005 and registered profits after taxation of 600.8 million euros in 2004. 70.55 of its stock belongs to other financial institutions including Banca Intesa, Eureko group and Caixa Geral de Depositos Group.
Austrian bank Erste had total assets of 148 billion euros in March 2005 and registered net profits before taxation of 255.1 million euros in 2004. Its main shareholder is the private foundation Die Erste Oesterreichische Spar-Kasse Privatstiftung with 61.5% of the capital.
“Erste is in a better position than Millenium because it is a bigger bank,” stated Jiri Stanik, an analyst at the Wood and Co brokerage company in Prague, on Monday, quoted by Reuters. The Austrian bank is experienced in acquiring and restructuring banks in the region, according to Stanik, who believes the strategic advantage is on Erste’s side.
“Erste has experience in the region,” said analyst Florin Petria. “But if Millenium fails to takeover BCR, I do not know where it could buy,” he added.
The Spanish bank Santander also forecast on Monday that Millenium BCP will win the privatization run and will pay 3.8 billion euros for the main share package.
According to Petria, Millenium’s investors were not happy about the bank’s intention to take over BCR. Erste’s shares increased by 0.2 percent when it reached the final stage in the BCR privatization. However, Millenium’s quotation decreased by almost eight percent. “If it is to buy such a large bank, it should carry out a significant capital increase,” said Stanik.
According to Santander, Millenium could request investors to contribute 1.7 billion euros to the final sum to be paid for BCR, if it is chosen as the new owner of the bank. “BCR represents a transaction which will transform Millenium and it should not be evaluated from a short term financial point of view,” said the analysts of the Spanish bank Monday.
The Romanian Commercial Bank has a network of 325 branches throughout the country, and is the largest bank in Romania. It had assets of 9 billion euros and about 4.9 million clients (in the third quarter of 2005), out of which 90% are individuals.
The privatization contract, approved by the government last week, meets the demands of all the parties involved. “This contract formula unites everybody’s interest, those of the strategic investor, the state, the international financial institutions and the minority shareholders,” stated the minister of Public Finance, Sebastian Vladescu.
Initially, eleven banks signed up to take over BCR – Millenium Banco Comercial Portugues, Erste, Deutsche Bank, BNP Paribas, KBC Belgium, Texas Pacific Group, ABN Amro, Belgian-Dutch bank Fortis, The National Bank of Greece, Italian bank Intesa and Dexia.
As the privatization of the BCR is now almost complete, the authorities can now focus on the privatization of the last state-owned bank, the Romanian Savings Bank (CEC). The authorities announced they need to know the winner of the BCR tender prior to proceeding with the CEC privatization. The investor which will buy CEC will have the possibility of taking over up to 75% of the capital but no less than 50% plus one share, according to the bank’s privatization strategy adopted by the government. The final binding offers for the privatization of CEC could be submitted in January 2006, after a postponement of the deadline, according to sources close to the government.
The National Bank of Greece, Erste Bank, Banca Monte dei Paschi di Siena SpA, Dexia Bank, EFG Eurobank, OTP Bank and the consortium composed of Raiffeisen International Bank and Raiffeisen Zentralbank Oesterreich Aktiengesellschaft have filed offers for the CEC takeover.