Dexia to finance municipalities, with or without BCR

Until the winner in the privatisation of Banca Comerciala Romana (BCR) is chosen, one of the contenders, Belgian bank Dexia, has decided to enter the market by opening a representation office for which it will hire 10 bankers. The target: municipality financing, which is seen as a high potential market. The Belgian bank is a leading player in this field internationally.

“We are beginning to prove our long-term interest in the Romanian market, which we started observing two years ago. We are already involved in a subscription of 70 million euros in the recently launched eurobonds issue by Bucharest municipality, and we are currently preparing financing for Arad together with EBRD,” Stephane Vermeire, the head of Dexia”s Business Developments division, told Ziarul Financiar.

Of the ten investors to have shown an interest in BCR, only ABN Amro is present on the market at a branch level, while BNP Paribas, Deutsche Bank and Intesa Bank only have offices.

Though a lesser-known brand in the region, Dexia”s assets were worth almost 431 billion euros at the end of the first quarter of this year.

While not thought to be a leading candidate in the race for BCR, compared with other, larger competitors, the Belgian bank was the first to express publicly its determination to enter the final phase of the privatisation process of what is Romania”s largest bank.

“We will submit an attractive bid for BCR – in terms of price, but also in terms of the banking expertise we can offer,” said Vermeire.

In reply to talk on the market that Dexia was primarily interested in BCR”s data room and the opportunity for brand visibility, Vermeire said the bank was genuinely motivated to hit “this highly attractive target”, which saw it assign a team of 60 people for the bid preparation.

“We are aware that price is an important factor in choosing the winner, and Dexia is easily able to perform such a deal. Other factors are of equal importance, however, related to the contributions we can make to the development of BCR,” explained Michel Buysschaert, head of the mergers and acquisitions unit. Last year, the bank generated profits of 1.8 billion euros and posted a ROE of 18.7%.

Dexia is developing in two main directions, adds Vermeire – those of retail and SMEs. It is Belgium”s second largest retail bank, with 1,200 branches, and it targets its financing at municipalities. On the other hand, its presence in Central and Eastern Europe is lower than with other competitors: it owns the sixth largest retail bank in Slovakia, and operates in Poland, Slovakia and Bulgaria through its division that provides financing to local authorities.