Friday 15 February 2008

Austria's Erste Bank top bidder for Romania's BCR, offers €3.2 bln (Nov 1, 2005)

Initially published in http://www.romania-report.ro/ (Nov 1, 2005)




Austria's Erste Bank is set to make the priciest ever Eastern European banking acquisition, having offered €3.2 bln for a majority stake in Romania's Banca Commerciala Romana (BCR), Financial Times Deutschland reported today by citing Romanian government sources.


Erste Bank beat Portugal's Banco Comercial Portugues, which is bidding €3.0 bln for the 61.88 pct stake in BCR, the newspaper said.

Deutsche Bank AG, which is understood to have offered €2.2 bln, lost the bid for BCR last week.

Erste Bank's chief executive Andreas Treichl told the newspaper he expects the deal to be sealed by December at the latest.




BCR -- Road to privatization

After an initial unsuccessful attempt to privatise BCR to a large strategic investor, the Romanian government decided on a more conservative divestment strategy scheduled for completion in 2006.

As an interim step, the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) each purchased a 12.5% plus one share stake in exchange for a total reported sum of $222m.

There is also a buy-back option should the government wish to reconstitute a majority stake prior to the final privatisation. As part of the investment, the IFC and the EBRD will also gain board representation as well as the commitment of the government to improve corporate governance and further develop the bank’s risk management profile in preparation for a final sale.

As part of this transaction, the balance sheet was also tidied up, as a further €35m in loans were provisioned and €50m of fixed assets were deemed to have been initially overvalued by BCR. Slated for 2006, the final privatisation of BCR will be a closely watched affair, as it will radically alter the balance of power in Romania’s banking sector, ‘The Banker’ reported last year.


Romania Report

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