Raiffeisen Bank takes over retail arm of Citibank

Raiffeisen Bank Romania has acquired the consumer portfolio of Citi, which took a strategic decision in December to focus solely on the corporate sector. The transaction is expected to be effective in the third quarter of 2013.

Raiffeisen Bank will take over a portfolio of 100,000 customers with assets of over EUR 90 million and deposits exceeding EUR 175 million. The deal also includes the transfer of Citi’s consumer banking staff in Romania to Raiffeisen.

“The fact that Citi’s business model is similar to ours in all segments, both in terms of customer service quality and product offer, mattered when signing the agreement,” said Steven van Groningen, president and CEO of Raiffeisen Bank. He added that the quality of the loan portfolio played a central role in the purchase decision.

Tibor Pandi, general manager of Citi Romania, said the sale “represents the best possible outcome for our customers, staff and shareholders.”

“Our commitment to Romania will see us continue to grow and invest in our business to better serve our local and global corporate, financial institution, commercial banking and public sector clients,” said Pandi.

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Citibank’s customers will continue to be served in accordance with their current terms and conditions, until the transaction becomes effective.

Citi’s Institutional Clients Group advised Citi on the deal, while Raiffeisen Bank was assisted by Raiffeisen Capital & Investment.

The deal comes at a difficult moment for the banking industry, which has an ongoing restructuring program. Lenders have had to rethink their retail lending strategies, while axing jobs and closing branches across the country.

The banking sector suffered losses of close to EUR 500 million in 2012 and lenders have to deal with a soaring rate of non-performing loans, which has reached 18 percent.

Raiffeisen Bank, owned by Raiffeisen Bank International, has been one of the few lenders that remained in the black, registering a net profit of EUR 88 million, down 8 percent on 2011. Its loan book remained stable at EUR 3.5 billion.

The Austria-based lender added 60,000 customers last year, reaching around 2 million individuals, 105,000 SMEs and 7,500 companies.

Law firm White & Case advises Raiffeisen Bank on the deal. The team involved in the acquisition comprised ten lawyers.

“It has been an Olympic-style race, I believe, for all parties involved. Extensive effort and focus were required for what will most likely be one of the largest deals of the year in Romania,” said Lucian Bondoc, co-executive partner of White & Case’s Bucharest office and head of the Bucharest office’s M&A/Corporate Practice Group.

Law firms PeliFilip and Linklaters supported Citibank on the sale side. The PeliFilip team working on the transaction involved ten lawyers coordinated by Carmen Peli, partner at PeliFilip.

Ovidiu Posirca