The two financial groups, Erste Austria and Millennium BCP (Portugal), vying for the takeover of Banca Comerciala Romana, the last major state-controlled bank in Eastern Europe, have one week left until they make their final financial bids.
After the conclusion of the talks that had been carried out over about three weeks, Erste and Millennium have around eight days to think about how much money they are going to put on the table of the Privatisation Committee to buy one third of the Romanian banking market, which currently amounts to 30bn euros, but is expected to gain momentum over the next five years, above the average of other countries in the region.
The latest information on the market shows the winner will be picked and the privatisation contract signed in December. The money is scheduled to be transferred in April next year
The Austrians and the Portuguese have to choose between maintaining the initial price offered in the first phase of the bidding process, or topping it. Two weeks ago, Millennium''s chairman, Paulo Teixeira Pinto, was quoted by Reuters as saying that "For those assets (BCR i.e.) under those conditions I won''t change a cent (of the bid i.e.)." He added he had not seen the correct price offered by Millennium cited in the media.
Erste has not made any comments on the bid submitted for BCR until now. In any case, whoever wins this battle will have to sign a cheque for more than 3bn euros for 61.88% in BCR, and the chiefs of the banks will not rest easy for a long time from now, given that they will have to prove to their own shareholders that the price paid was worth it.
Analysts believe the price for BCR will be the highest paid for a bank in the region. Whereas deals in the banking world are usually closed for a price that is two or three times higher than the net asset value (total assets minus liabilities), the multiple in BCR''s case is close to five.
BCR''s own funds stand at around 1.2bn euros, while its assets are close to 8bn euros. Nine months into the year, the bank posted profits of 180 million euros. The second bank in Romania, BRD, held by France-based Societe Generale, posted 124 million-euro profits.
Austria''s Erste posted 509 million-euro profits for the first nine months. BCP Millennium logged 546 million euros in the same period.
The two bidders for BCR have reportedly offered 3-3.1bn euros (BCP) and 3.2bn euros (Erste). The actual bids may be lower than that. What is for sure is that the two clearly stood out from the other candidates.
500m-eurobond issue for BCR
Banca Comerciala Romana agreed to the oversubscription of its 300 million-euro eurobond issue to 500 million euros, with the purchase orders placed by investors exceeding 750 million euros, a release of the bank shows. This is the largest eurobond issue ever released by a Romanian private company. The bonds sold by BCR mature in three years and come with a 4% yearly yield. Subscriptions came from investors in 16 countries. The bonds were issued at a price of 99.306% of their value and a yield of 0.95% more than the three-year euro swap rate. "We wanted and succeeded in reaching a certain quality on the international market," stated Dan Bunea, BCR''s executive vice-president. adrian.mirsanu@zf.ro ; razvan.voican@zf.ro
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