Romania: Competition Watchdog Yet to Give Go-Ahead to BCR’s Takeover

19. Juni 2006, 00:00

The Romanian Competition Council cannot pronounce on the takeover of the Romanian Commercial Bank (BCR) by Erste...

The Romanian Competition Council cannot pronounce on the takeover of the Romanian Commercial Bank (BCR) by Erste Bank as it is still waiting for information from the Ministry of Finance and Authority for the Recovery of State Assets (AVAS), the Competition Council head Mihai Berinde said.

The information needed by the Council to okay the transaction refers to the exact value of the guarantees issued by the Romanian state in favour of BCR due to its pending merger with Bancorex, Berinde specified.

"AVAS and the Ministry of Public Finance must settle this issue through a normative act, regardless of its form, a law or an ordinance. Until then, the Competition Council cannot issue a final decision," said Berinde.

The advisory opinion the council is one of the last requirements Romania must fulfil in order to complete BCRs privatization and transfer to Erste the shares the latter bought.

Initially, Erste Bank was due to transfer to Romania the value of the 61.88-per-cent stake in BCR by June 26, but Romanian authorities and Erste Bank have agreed to extend the deadline by three months, given than an answer is waited for from the Competition Council with respect to the State-funded aid to Bancorex.

Sources close to the matter say that AVAS is analysing all files taken over from Bancorex and in whose account state securities were issued.

If it is determined the aids were illegally granted, the price paid by Erste to the Romanian state would be reduced. BCRs privatisation contract specifies that if the Competition Councils decision indicates the illegality of state budget grants for Bancorex debts, these values would be subtracted from the acquisition price paid to AVAS.

After the go ahead of the Competition Council, Erste Bank will deposit EUR 3.75 billion in an escrow account opened at Citibank London and the Romanian state will cash in EUR 2.2 billion from the BCR sale, and the rest will go to the minority shareholders.

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