Erste Group Bank has reached a preliminary agreement with SIF Oltenia, minority shareholder in Banca Comerciala Romana (BCR), for the acquisition of its entire 6.29 percent stake or 1,023,534,303 shares in BCR.
Subject to the successful completion of Erste Group and SIF Oltenia’s corporate and regulatory approval processes (Extraordinary General Meeting of Shareholders in SIF Oltenia’s case, Supervisory Board and European Central Bank in Erste Group’s case), the purchase will be implemented in a single sale-purchase transaction.
The financial terms of the transaction are: cash for 1,023,534,303 BCR shares at a price of EUR 0.136 per share (RON 0.64 per share, based on 22th June 2018 exchange rate). Subsequent to the completion of the transaction, Erste Group’s participation in BCR is set to increase to 99.88 percent.
The remaining 0.12 percent or 19,830,840 shares in BCR are held mainly by former and current BCR employees. The transaction values BCR at a price/book multiple of 1.35x as of Q1 2018, in line with market valuations for Romanian listed banks.
The total value of the transaction amounts to EUR 140 million (RON 654 million, exchange rate 4.67 RON/EUR). The transaction would have a negligible impact on Erste Group’s CET1 Capital. The execution of the transaction is planned for the second half of the year 2018.
“This transaction has been expected on both sides for some time. At Erste Group, our strategy a it has always been to hold the largest possible stake in the subsidiaries and we are glad that our participation in BCR will increase to 99.88% of the capital. At the same time, SIF Oltenia was interested to maximize the highest asset in its portfolio. If the overall trend is for international banking groups to choose to disinvest and reduce exposures, we reconfirm the long – term vision of the exceptional potential of the of the CEE region. The transaction that follows on from this agreement will make Erste Group one of those bigger foreign investors in Romania in 2018,” said Andreas Treichl, CEO of Erste Group.
“The management of SIF Oltenia has assumed a long-term commitment to its shareholders to manage the portfolio in the best conditions and maximize the confidence that our investors have granted. By participating in BCR, the largest bank in Romania, SIF Oltenia has a strategic role in the economy Romanian. SIF Oltenia will continue to have a strategic role in the economy after the sale of the shares BCR by investing in sectors with long-term growth potential,” said Tudor Ciurezu, president and general manager of SIF Oltenia.
In October 2006 Erste Group completed the acquisition of a 61.9 percent stake from AVAS (Romanian Authority for Assets Recovery), the EBRD and IFC. In November 2006 Erste Group acquired a further 7.2 percent in BCR through an offer made to BCR employees. In 2011 Erste Group acquired a 24 percent stake in BCR from four of the five SIFs (SIF Banat-Crisana, SIF Moldova, SIF Transilvania, SIF Muntenia – each 6.0 percent), in an offer which involved cash and share swap.