AFTER THE TRANSACTION BETWEEN BANCA TRANSILVANIA AND BANCPOST

Ciorcilă and Treichl tied for the top spot

28 nov. 2017 English Section
EMILIA OLESCU (translated by Cosmin Ghidoveanu)
Ciorcilă and Treichl tied for the top spot

Customers with borrowers in CHF from Bancpost are waiting for a conversion program with a discount 

After moving to second spot last year in the domestic banking system, through the acquisition of Volksbank, Banca Transilvania (BT) ends up on equal footing with BCR, taking over Bancpost, from Greek group Eurobank.

The Romanian banking market is in a novel situation: has the same market share as BCR, respectively 16.35%, calculated as the weight of the total assets of the banking system.

The two banks which signed on Friday, the transaction for the acquisition of the Greek-owned bank by BT have announced that they have market shares of "about 3%" and, respectively, "over 13%" of the total assets.

Contacted by BURSA, BCR refused to tell us its market share, as the representatives of the bank said: "We do not comment on the market share, we report results. The market share represents what we own out of the total banking assets".

Even the National Bank of Romania (NBR) declined to send us that number, but it told us that after the first nine months of this year, the total net assets of the banking system amount to 406.4 billion lei.

According to the report by BCR posted on its own website, the total assets of the bank amounted, at the end of September, to 66.46 billion lei, which represents a market share of 16.35%.

Banca Transilvania and Bancpost hold assets of 54.9 billion lei and respectively 11.6 billion lei, according to the press releases issued on Friday by the two banks.

That means that in the total market assets, BT holds 13.5%, and Bancpost - 2.85%, meaning a total of exactly 16.35% - the equivalent of the market share that BCR has after nine months.

The acquisition of Bancpost by Banca Transilvania will create a market leader in terms of loans and deposits, according to a presentation made by BT for investors. It shows that the two financial institutions combine net loans of 32.9 billion lei in 2016, and deposits of 50.6 billion lei.

Lucian Isar: "The acquisition of Bancpost by Banca Transilvania is an unfavorable move for Romania"

The acquisition of Bancpost by Banca Transilvania is an unfavorable move for Romania, says former banker Lucian Isar, who said: "We would have expected new capital sources to enter the country. It is a shame we are not gaining foreign capital, because financial intermediation needs capital. From the point of view of national interest, new funds that enter the shareholder structure of Romanian banks or new foreign banks entering the market would have been praiseworthy. Other than that, the acquisition of Bancpost by Banca Transilvania is just a normal transaction of corporate finance". Lucian Isar expressed his hope that in the future, "those wanting to enter the capital of Romanian banks will not be driven away through specific methods".

The banking system will shrink, the specialist said, opining that in this case, Banca Transilvania has no sources for raising money available, because "there are no investors on the Romanian capital market": "In order to grow, in a bank, you need to have capital. If you have restricted capital, then financial intermediation is also restricted. Moreover, with such a weak capital base and with such a significant size, Banca Transilvania isn't becoming, like some would say, too big to fail, but a severe systemic risk upon any drop of the Romanian economy. So, in the national interest, it would be good if fresh capital entered the system. If we, with the same domestic capital, we are also taking in some of the foreign capital, and then all of a sudden the intermediation force shrinks".

Some specialists in the area think that regrouping dictates in the hard times. Any such mergers are welcome at such moments, and there will be many of them, the quoted sources say, and they mentioned that it is good to have strong banks in the current market conditions.

Customers with CHF loans (CHF) taken out from Bancpost are waiting for a discounted conversion program in order to resolve their problems they have with these loans. These two banks didn't tell us whether there is a strategy in that regard.

In the opinion of Lucian Isar, a major part of the transaction will be set aside for that kind of operations. The acquisition value may amount to approximately 230 - 250 million Euros, mîrşanu.ro recently wrote.

BT also wants to buy up a significant part of Moldovan bank Victoriabank

Banca Transilvania will acquire from Eurobank Group the stocks it holds in Bancpost S.A., ERB Retail Services IFN S.A. and ERB Leasing IFN S.A., the two banks involved in the transaction on Friday.

Horia Ciorcilă, the president of the Board of Directors of Banca Transilvania, said: "The acquisition of Bancpost is an opportunity for BT, due to the potential for integration with our business. This acquisition completes the strategy for organic growth of Banca Transilvania, consolidating our market position. We are prepared to adapt responsibly for the new size of BT and the new realities. Our bank will continue to support Romanian entrepreneurs and the local economy, creating added for the shareholders, customers and the team".

In turn, Stavros Ioannou, the deputy CEO of Eurobank, said: "Together with the sale of Bancpost and the affiliated companies, Eurobank is meetings its last sale obligation according to the restructuring plan approved by the European Commission. I think that this transaction with a partner with an indisputable reputation such as Banca Transilvania will be done with the full interest of customers, depositors and Bancpost employees in mind. Eurobank will focus on the development of its own key markets. I wish to thank all my colleagues from the Romanian subsidiaries for the strong cooperation over all these years, as well as to the BT partners for the successful completion with this approach". Banca Transilvania and Bancpost will continue to conduct their activity independently, until receiving the approvals of the NBR and of the Competition Council, which is expected to happen in the coming months. Once the acquisition is completed, BT will integrate Bancpost in its business. Barclays Bank PLC was the only financial consultant of Banca Transilvania for this transaction. PeliFilip provided the legal assistance, and Deloitte - financial consulting for accounting and diligence aspects. Mediobanca - Banca di Credito Finanziario S.p.A. and HSBC Bank Plc were the financial consultants of Eurobank for the transaction, and Shearman & Sterling LLP and Schoenherr şi Asociaţii SCA have provided the legal counsel for the two banks.

Bancpost is ranked 9th among Romanian banks, with over 2,000 employees and a network of approximately 150 headquarters, as over 1 million customers are working with this bank.

According to the quoted press releases, Banca Transilvania has over 7,000 employees and 2.2 million customers, being listed on the Bucharest Stock Exchange.

BT recently said that it intends to buy an initial stake of over 39% of Victoriabank, the third bank in the Republic of Moldova, and together with the EBRD it will reach a majority holding.

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