Tiriac is leaning towards merger with HVB Bank Romania

Businessman Ion Tiriac is leaning towards a merger of Banca Tiriac, in which he holds 92%, with the Romanian subsidiary of HVB Bank, the second largest German banking group, sources on the banking market told Ziarul Financiar.

He prefers merger to a direct sale of the bank, the quoted sources mentioned. Ion Tiriac did not care to comment on the information.

HVB Romania representatives declined comment, as well.

According to the quoted sources, Tiriac has received several offers for his bank, with the groups interested including BNP Paribas, HVB, Societe Generale, National Bank of Greece, Dexia (Belgium), Erste Bank and Bayerische Landesbank.

Banking sources say the interested groups submitted bids appraising Banca Tiriac at 200 to 320 million euros. The businessman”s consultant for this process is Rothschild investment bank. The businessman has not made a decision yet about how to handle the transaction (merger or sale).

In case the Tiriac-HVB merger project comes through, the new bank will immediately challenge the third place on the banking system, now held by Raiffeisen Bank.

Banca Tiriac”s assets amounted to 620 million euros at the end of last year, ranking 11tth in this respect, while HVB Romania had increased its assets to more than one billion euros, ranking seventh. Raiffeisen reported assets worth 2.08bn euros in 2004.

Banca Tiriac last year posted net profit of 17 million euros, an increase of 40% on 2003, according to the international accounting standards, while HVB”s net profit amounted to more than 20 million euros. Banca Tiriac”s equity capital amounted to 100 million euros on December 31, up 22%. HVB”s equity capital stood at 54 million euros. Banca Tiriac”s volume of loans granted to customers was in excess of 330 million euros at the end of 2004, while HVB had granted nearly 600 million euros in loans until the same date. Banca Tiriac is stronger on the retail market, where it has a wider network, unlike HVB, which has a sound footing on the corporate segment.

Tiriac has repeatedly said in the course of time that he prefers a partnership with a major financial group to a direct sale of the controlling interests.

“I did not sell the controlling interests last year because I felt I could wait. Meanwhile, both the economy and the banking market have increased, we have grown organically, and so has the interest in the bank. I am in no rush to sell, but I always think I need a strategic partner if I want to move on to the next level,” Ion Tiriac was saying in February this year.

Early in 2004, HVB and Greek Piraeus Bank Group submitted bids to buy Banca Tiriac, which the businessman rejected.

There are four leading banks on the market at the moment that are interesting to foreign groups in view of takeovers: Banca Comerciala Romana (Romanian Commercial Bank – BCR), Casa de Economii si Consemnatiuni (Romanian Savings Bank – CEC), Banca Transilvania and Banca Tiriac. The rest of the banks that might become targets for acquisitions are too small, do not hold significant positions on the retail market and their only valuable asset is their licence for banking operations. There were 39 operational banks at the end of 2004, whose total assets stood at nearly 23bn euros.

cristian.hostiuz@zf.ro

razvan.voican@zf.ro