EBRD adds Banca Transilvania stake to Romanian possessions

The European Bank for Reconstruction and Development (EBRD) will come to hold 15% in Banca Transilvania following a capital increase by private placement of nearly 60bn lei ($2 million). The bank’s shareholders are to convene on September 7 in order to endorse this capital increase, as well as to modify the operational statute of the bank.

The price EBRD is to pay for one Banca Transilvania share reaches 10.5 cents, with the two parties having settled for this type of payment to avoid any comment about possible losses caused by the depreciation of the ROL.

If making a relatively simple calculation and taking into account that Banca Transilvania’s share capital will amount to 396.160bn lei following the increase, one may say EBRD will pay some $6 million for the 15%.

“The rest of the money left after the increase will be used for attaining an older goal of the bank, that is increasing the market share and EBRD is the right partner for the job. We will also work on expanding and optimising our branch network, on implementing banking software and Internet banking solutions, as well as on the development of the SME sector.

Furthermore, if the necessary opportunities present themselves in time, the bank will be open to mergers and acquisitions,” Iosif Pop, Banca Transilvania chairman, told Ziarul Financiar.

The announcement about EBRD taking over a stake in Banca Transilvania prompted intense speculations with the Cluj-based bank’s shares, yet the price settled to 2,650 lei at close, 1.9% more than in the previous day. The day’s high was 2,900 lei.

The European Bank for Reconstruction and Development had first showed interest in taking over a stake in Banca Transilvania early last year, but no management officials of either of the two banks had volunteered any information before this spring. In the mean time, the two banks kept on working together, with EBRD granting Banca Transilvania two lines of credit for SMEs this year.

EBRD is the largest institutional investor in Romania, having invested more than one and a half billion euros. Where the banking system is concerned, EBRD holds stakes in Alpha Bank Romania, Banca ?iriac and Banca Romana pentru Dezvoltare (Romanian Development Bank). At the same time, EBRD granted BancPost a loan that can be converted into shares upon maturity.

Banca Transilvania was established as a joint-stock company in Cluj back in 1993. The initiative came from several businessmen from Cluj. It started out with 2bn lei in share capital, 79% Romanian-held and 21% foreign-owned. None of the shareholders owns more than 5% in the bank’s capital.