Largest bank takeover in Romania in recent years: Banca Transilvania buys Volksbank Romania

Banca Transilvania, the third largest bank in Romania by assets at end-September 2014, has signed an agreement to buy 100% of Volksbank Romania, Banca Transilvania announced on Wednesday, December 10. The value of the transaction was not made public. „The acquisition of Volksbank Romania is part of our bank’s growth and consolidation strategy, reaffirming our commitment as an active market player and supporter of the Romanian economy," said Horia Ciorcilă, chairman of the board of directors of Banca Transilvania, and one of the bank’s largest shareholders, with some 5% of its shares. "After the integration, considering the market shares of the two banks, BT aims to become the 2nd largest bank in Romania. Banca Transilvania is well capitalized, enjoys high liquidity, an increasing market share and positive financial results,” he added. Volksbank Romania was previously owned by an investment vehicle which was controlled by Österreichische Volksbanken AG, Groupe BPCE, DZ BANK AG and WGZ BANK AG. Banca Transilvania and Volksbank Romania will operate as separate entities over the next months, pending the successful closing of the transaction which is still subject to limited set of conditions including antitrust, merger clearance and centralbank approval. Upon the successful completion of the transaction, Banca Transilvania is planning to fully integrate Volksbank’s business into its existing structure, the bank’s representatives have announced. “Banca Transilvania and Volksbank Romania are both universal banks sharing a similar business model, the same business lines and the same target market. As a result of this transaction, Banca Transilvania aims to harmonise the strengths of the merged entity, in order to enhance efficiency, reduce costs for customers, expand the branch network and launch new products,” reads the bank’s statement. Banca Transilvania is the largest banking institution in Romania which is majority owned by Romanian investors (51%). However, some of its largest shareholders are international financial institutions such as the European Bank for Reconstruction and Development (EBRD), which holds 14.6% of Banca Transilvania’s shares, and the International Finance Corporation, World Bank’s investment arm, which has 5.36% of its shares. Romanian investment company SIF Moldova holds 8% of the bank’s shares and Horia Ciorcila, the bank’s founder and president of the board, has 5%, according to the latest available data, as of December 10, 2014. Banca Transilvania is one of the few local banks which managed to increase its market share organically since 2008. The bank had total assets of EUR 7.7 billion, as of September 30, 2014, which is almost double compared to the bank’s assets at the end of 2008. Its market share was 9.7%, end-September 2014, up from 5.4% at the end of December 2008. Banca Transilvania is also one of the most profitable local banks. Volksbank was the ninth largest bank in Romania by assets, at the end of 2013, with some EUR 3 billion in assets and a market share of 3.8% (down from 6.8% in 2008). The bank sold a large non-performing loans (NPL) portfolio in July this year, worth almost EUR 500 million (nominal value). Law firm Peli Filip acted as legal advisor for Banca Transilvania in this transaction, KPMG was the financial advisor. The investment bank which arranged the deal was VCP Vienna Capital Partners. Volksbank’s shareholders were advised by law firm Schoenherr and by Rothschild investment bank.