Банкеръ Weekly



Bulgarian banks are still proving that investments in them are profitable. Because there are not many instances in world practice when the owners of a bank have received from selling it - independently if the deal is effected on the stock exchange or through direct negotiations - 4.5-fold more than they have paid for buying it. Well, that happened in Bulgaria.On November 3, 2004 the CEO of Bank Austria Erih Hampel and the Executive Director of HVB Bank Biochim Peter Harold signed in Vienna a contract for the purchase of 99.9% of HEBROSBANK shares with its owners - the two Dutch subsidiaries of Regent Pacific Group - SWC and SWCR Investment. The Austrian bank will pay 90% of the agreed sum and its subsidiary in Bulgaria, HVB Bank Biochim, will pay the remaining 10 per cent. The exact price of the deal was not specified, but according to Mr. Hampel it exceeds twice the accounting worth of HEBROSBANK's capital. It is known that in end-September 2004 it was about BGN106MN. A week before the deal the managers of big credit institutions in Bulgaria commented that Bank Austria was ready to pay EUR120-126MN at the most for HEBROSBANK. A day after the the sale contract was signed, however, the officers at HVB Bank Biochim and HEBROSBANK knew that the price was EUR110MN. This information fully coincides with Mr. Hampel's words. If that is the money to be paid for HEBROSBANK, it will be 4.5 times higher than the USD23.5MN paid for its privatisation. Regent Pacific Group remitted that amount to the Bank Consolidation Company (on March 29, 2000) for 98% of the shares in the Bulgarian bank institution. In 2003 Regent Pacific transferred its stocks in HEBROSBANK to its two Dutch subsidiaries, in order to get a year later a sales offer with the impressive 450% return. According to bankers, the price that the Austrians will pay for HEBROSBANK is too high. However, Bank Austria will acquire not just the assets of the Bulgarian bank but also its business in the country - its network of branches and market positions. HEBROSBANK has assets reaching BGN600MN, serves 210,000 customers, and owns 92 branches and offices that will be very useful to HVB Bank Biochim in the development of its services to individuals and small and mid-sized enterprises. According to the analyses of foreign experts, the future of banks in Central and Eastern Europe will depend exactly on the increased supply of consumer crediting as it brings the highest profit.When HEBROSBANK deal is closed, the Austrian bankers will control over 10% of all bank assets on the Bulgarian market thanks to the new acquisition and HVB Bank Biochim. The two local banks have launched more than 17% of all corporate loans and 14.5% of the consumer credits in the country. They also serve 12.1% of all deposits and accounts of individuals and companies. Besides, by acquiring HEBROSBANK the Austrian bank is taking control over its subsidiaries, Hebros Leasing and Optima Financial Services. They will be a suitable supplement to Biochim Leasing Bulgaria, subsidiary of HVB Bank Biochim.In order for the HEBROSBANK deal to be declared complete, it has to be approved by the central banks of Austria and Bulgaria. Only then will Bank Austria and HVB Bank Biochim pay to Regent Pacific Group.The HVB Bank Biochim and HEBROSBANK merger process itself will not start until 2006. It will lead to deletion of the Plovdiv-based HEBROSBANK from the list of credit institutions in Bulgaria. That change will appear most damaging to the town of Plovdiv as it will lose one of its largest taxpayers.

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