“The foreign legion” in the Bulgarian banking system will welcome the next new player pretty soon. The news that yet another of the top ten lenders has headed for a foreign majority owner came as a surprise to no one.
The thrill around the sale of EIBank is more related to the selection of a buyer. Bulgaria’s ninth largest lender drew interest from Spanish La Caixa and Belgian KBC. Both belong to the creme de la creme of the European banking market and the entry of any of the two will further bolster the stiff competition.
The winner will emerge within two weeks time. The talks have been going on for five months and are now drawing to an end. The two suitors have submitted financial offers but the present shareholders are still discussing details.
The Rumours About the Sale
As typical of such deals, EIBank is keeping silent about the negotiations. Yet earlier in the week Reuters agency reported about the upcoming sale quoting two sources that refused to be named. The lack of an official statement by the present shareholders is pretty normal given the confidentiality clauses accompanying any such deal.
Allegations have crept in media publications that there is some mysterious third bidder. This is reportedly the U.S. General Electric, which, according to unofficial Information, dropped out at an early stage of the race without even doing due diligence on EIBank. The U.S. company said at the very beginning it wanted to buy the whole stake that was not up for public trade (making up some 97 pct of the capital). But that clashes with the plans of the present majority owners, that will allegedly keep a minority stake in the bank. This applies not so much to Icelandic billionaire Thor Bjorgolfsson (who owns 48.6 pct of the shares through his investment vehicle Novator Finance Bulgaria) as to Tsvetelina Borislavova, who wants to keep some 30 pct of the shares, according to unconfirmed Information. Borislavova is registered as an owner of 24.3 pct in the bank. Yet in fact her package is twice that size as she has a contract for the purchase of the shares of the bank’s founder and former managerial agent, Svetoslav Bozhilov.
EIBank Shares Jump
As expected, the news about the forthcoming sale of EIBank buoyed up the share price to the record high 156 levs from 130 levs with its market capitalisation passing the 1.0 bln levs benchmark. Slack trade, however, calmed down the shares to below 140 levs on Thursday.
EIBank is now Bulgaria’s ninth largest bank. Its assets exceed 1.5 bln levs accounting for some 3.1 pct of the market at the end of August. The bank is more active in corporate lending where it holds 3.4 pct of the market. Its market share by consumer and mortgage loans to individuals is 1.6 pct. The bank's market share in terms of attracted deposits stands at 3.6 pct. The lender reported a net profit of 16.9 mln levs for the first six months of the year.
Elections To Speed Up the deal
The shareholders will in any case make haste to wrap up the deal so that it is not affected by the election campaign in Sofia. Present city mayor Boyko Borissov is Borislavova’s life partner. In the middle of July U.S. magazine Congressional Quarterly published fake allegations about Borissov trying to ruin his image. The fear of similar attacks during the election campaign will push the present EIBnak owners to get over with the sale.
KBC Group
Belgian bank and insurance group KBC is one of the most active buyers of financial institutions in central and eastern Europe. The group integrates banking and insurance services. It has subsidiaries in almost all countries in the region and set its eyes on Bulgaria long ago. The first step was the acquisition of over 85 pct in insurer DZI. Some 50 pct in KBC is held by strategic investors while the remainder is in the hands of portfolio investors (based in the USA or the UK). The group’s share capital exceeded 16.5 bln euro at the end of June when its net profit was 936 mln euro.
La Caixa
La Caixa is Spain’s third largest and first biggest private bank. It is headquartered in Barcelona, the capital of the autonomous community of Catalonia, where it has the largest presence. Its core business is retail banking. It boasts the largest office network and leads the online banking market. Its assets exceeded 209 bln euro at the end of 2006 and its net profit came in at nearly 3.0 bln euro, almost double from the previous year. Its board recently unveiled plans for expansion in eastern Europe, the USA and Asia.
($1 = 1.3827 Bulgarian levs)
22-28/09/07, P79
 | SeeNews SeeNews is a business and financial news and information provider which brings its visitors and customers access to detailed coverage on the fast-growing companies, economies and markets of ten Southeast European nations. |
Search for: news |
Search for: deal |
Search for: market |
Search for: assets |
Search for: acquisition |
Search for: share |
Search for: company |
Search for: Bulgaria |
Search for: institutions |
