Page 10 - Buy Russia - bne IntelliNews monthly magazine April 2017

10 I Companies & Markets bne April 2017
SEE banking markets are ripe
for consolidation
Clare Nuttall in Bucharest
Anew wave of consolidation is expected in Southeast Europe’s over-populated banking markets as both local and international players seek to build market share through acquisitions.
In Romania, Banca Transilvania recently announced that it had become the country’s second largest bank by assets, over- taking BRD-Societe Generale. Transilvania's 2016 results show the bank was catapulted into second place after its acquisition of troubled Volksbank Romania the previous year.
In a market where numerous small and mid-sized banks are struggling – Volksbank, for example, had a high exposure to Swiss franc loans – the acquisition by Transilvania serves as a model for the growing pattern of M&A among domestic banks as the healthier among them try to build themselves up into major local players. At the same time, the international banking groups that remain committed to the Romanian market have also been snapping up assets from former rivals seeking to exit.
Other deals in the last few years include OTP Bank Roma- nia’s purchase of the local operations of Portugal’s Millennium Bank, UniCredit Tiriac Bank’s acquisition of RBS Romania’s corporate business, and most recently, the merger of Banca Comerciala Carpatica and Patria Bank (formerly Nextebank).
Advisers forecast more of the same this year. Jonathan Wheatley, director, financial sector transactions at PwC, notes
www.bne.eu
that a number of banks are currently in the sale process, and “we expect 2017 to be a year in which more than one banking transaction may take place”.
Wheatley lists numerous drivers for consolidation. “One of the most important factors has been the trend of foreign banks
to refocus on their home markets since the onslaught of the financial crisis, often as a response to political pressure at home,” he tells bne IntelliNews.
“Other drivers include deleveraging as a condition for receiv- ing state aid, where banks are required to divest non-core and non-strategic businesses in response to receiving a bail out from state authorities ... There are also a number of mid-sized banks that are struggling to compete with the top-tier banks and may have to decide whether they wish to continue to oper- ate in this market or not.”
This forecast comes in the context of the firm’s wider optimism regarding the Romanian M&A market in 2017, says his col- league, Cornelia Bumbacea, partner, transactions. M&A in the financial sector is expected to take place alongside consolidation in other sectors ranging from healthcare to industrial to media.
On the other hand, Alexandru Birsan of Bucharest-based law firm PeliFilip notes that, “while there have been some sig- nificant deals – notably UniCredit’s purchase of a 45% stake in its Romanian operations, the acquisition of Volksbank