New Owner of Romania’s CEC to Be Announced in Two Months

18. Juli 2006, 00:00

Romania’s finance minister Sebastian Vladescu announced that financial offers for Romanian Savings Bank...

Romania’s finance minister Sebastian Vladescu announced that financial offers for Romanian Savings Bank (CEC) would be opened on July 25 and the new owner would be named within two months.

Hungarys OTP Bank is among the candidates to acquire 69.9 per cent of the shares of state-run CEC. Only two other banks, Austrias Raiffeisen and the National Bank of Greece filed binding bids by the Monday deadline. French-Belgian Dexia and Greeces EFG Eurobank opted out. EFG Eurobank announced earlier that instead of bidding for CEC it preferred to focus on fast organic growth of its subsidiary Bancpost in Romania.

The price of CEC could exceed EUR 500 million and the Romanian finance ministry underlined that it should seek a price in the EUR 1 billion range. A recent research note by Merrill Lynch put a price tag of just under EUR 500 million for stake up for sale. CEC Chairman Eugen Radulescu said last week that the financial institution had a book value of EUR 200-250 million, which would include re-evaluation of fixed assets.

Analysts believe that OTP will be forced to fund such an acquisition by selling shares that are deeply undervalued, and shareholders will be better off if the Hungarian bank fails in its bid. Considering that OTP spent EUR 1 billion on acquisitions in the past few months, it is likely that OTP has not submitted the highest bid for Romania’s CEC.

All three banks in the race already have investments in Romania, which could push the bids lower as they could opt for organic growth if they fail to buy CEC. Romania’s CEC is the last big bank to be sold. Its market share is around 4.5 per cent. Its total assets as at December 31, 2005 amounted to EUR 1.53 billion. It has the largest network in the country with over 1,400 branches and some 2 million clients.

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