ROMANIA: Austrian bank will buy Romania's biggest bank, BCR, after it wins one of last major bank privatisations in eastern Europe

Record ID: 565357

  • Title: ROMANIA: Austrian bank will buy Romania's biggest bank, BCR, after it wins one of last major bank privatisations in eastern Europe
  • Date: 22nd December 2005
  • Summary: (CEEF) BUCHAREST, ROMANIA (DECEMBER 20, 2005) (REUTERS) EXTERIOR OF HEADQUARTERS OF BCR BANK
  • Embargoed: 6th January 2006 12:00
  • Keywords:
  • Location: Romania
  • Country: Romania
  • Topics: International Relations,Finance
  • Reuters ID: LVA9BT35N7C8QBDO751G09RTZNUK
  • Story Text: Austria's Erste Bank will buy Romania's biggest bank, BCR, after it won one of the last major bank privatisations in eastern Europe with a 3.75 billion euro ($4.49 billion) bid on Tuesday (December 20). Erste will have to raise its equity by more than a fifth to fund buying the 61.88 percent stake in Banca Comerciala Romana (BCR), its biggest purchase ever, bolstering Erste's position as the second-largest bank in the former communist bloc. The sale, which had attracted several European banks, shows Romania's determination to push ahead with economic reforms ahead of European Union entry which the Balkan country wants to achieve in 2007, Finance Minister Sebastian Vladescu said.

    Erste Bank representative, Manfred Wienner spoke to journalists after the announcement. "To obtain a controlling shareholding in the clear market leader in a market like Romania is a sensation for Erste bank," he said. "You can rest assured that Erste bank will not only bring BCR into the Erste bank universe in central Europe, but that we will do everything within our means to bring Romania to Europe," he added.

    Romania needs to boost public administration transparency and curb corruption to join the EU quickly, and its partners in the sale, the European Bank for Reconstruction and Development and the World Bank's investment arm IFC, have praised the tender as transparent. Romania's government holds a 36.88 percent stake in BCR, which it is selling together with a 25 percent stake owned since 2003 by the EBRD and the IFC. Five Romanian investment firms own about 30 percent of BCR and the bank's employees hold 8 percent.

    "This is a new competitor in Romania's banking sector, very serious, with lot of experience in Central and Eastern Europe, which will intensify what we need here - competition," said economic analyst, Florin Petria. "Also we are talking about a lot of money. Romania needs this because there are many priorities for the next year. The money represents an important factor of this transaction," he added.

    According to Reuters calculations, Romania will cash in 2.23 billion euros from the sale, the largest amount it has ever received from a privatisation. It has said the money may be used to upgrade its crumbling infrastructure and pension reform, but it has not said if it will channel the cash through the foreign exchange market. Erste will spend 100 million euros to improve BCR's branch network and infrastructure. It expects 90 million euros in extra costs next year, 100 million euros of additional risk provisions and a 100 million euro tax-related charge.

    BANKS BANKING
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