Banca Transilvania performs record capital increase: 121 million euros

Banca Transilvania (TLV), the biggest private bank with Romanian capital, will propose to its shareholders a share capital increase worth 448.6 million RON (121 million euros), which will incorporate last year’s net profit, so that the cash required for growth stays within the bank.
As a result of this move, the share capital of Banca Transilvania will increase to 1.6 billion RON (286 million euros), and exceed that of BCR or BRD-SocGen, the largest banks in the system.
Despite last year’s record profit, the bank will not disburse cash dividends this year, but continue its policy and disburse bonus shares instead, on which it has relied for development for the last ten years, since floatation on the Stock Exchange. When the bank went public in 1997, its share capital stood at 3 million euros and its market capitalisation at 17 million euros.
The capital increase will be conducted with the net profit made in 2007, 319.5 million RON (86.3 million euros), the capital premiums from previous increases, which total 98.6 million RON (26.6 million euros), as well as a cash contribution from its shareholders, worth 30.55 million RON (8.25 million euros).
“We are not a company that disburses cash dividends, because investors who own or buy shares in Banca Transilvania pursue long-term development and not short-term gains from dividends. We will not disburse cash dividends to our shareholders, at least not in the next few years,” Horia Ciorcila, Banca Transilvania’s chairman of the board told ZF.
Ciorcila is the bank’s main individual shareholder and owns 5%, a stake valued at around 63 million euros on the Bucharest Stock Exchange. The biggest shareholder in the bank is EBRD, 15%, while the SIFs own around 14.7%.
If the shareholders approve the capital increase as proposed by the Board of Directors, each of them stands to receive 68.4 bonus shares for every 100 shares held, which is the highest number of bonus shares disbursed during the last six years.
Each shareholder will also be able to subscribe 5 new shares at 0.35 RON for every 100 shares held, with 29 million euros set as the amount earmarked to come from shareholders.
The funds raised from the capital increase will be used to develop the bank’s network of branches, as well as its loan portfolio.
“I believe we will continue to grow much faster than the market, but we will try to be more profit-oriented. We want to demonstrate that our network has started to generate rising profits. We target a 0.7-0.8% increase in market share,” Ciorcila said.
Last year, Banca Transilvania’s assets increased by 71.5% and reached 13.87 billion RON (3.84 billion euros). As a result, the bank’s market share increased to 5.53%. Banca Transilvania climbed to fourth position among banks in Romania, according to the NBR data.
Its profit increased 2.8 times to 340 million RON (102 million euros), largely due to the sale of its insurance division, BT Asigurari, to French-based Groupama for 90 million euros.