MKB Bank Rt has revealed details of its planned acquisition of Romania's Romexterra Bank.
MKB said on Thursday it signed a contract on its intention to purchase at least 51% of Romexterra Bank on July 6. MKB said its owners had already decided to finance the acquisition with a capital increase and the issue of subordinated debt. The bank will finance planned developments at Romexterra through syndicated loans and the issue of domestic currency-denominated and euro-denominated bonds. If the acquisition is successful -- some 90,000 small shareholders control a combined 77.13% of Romexterra's shares -- MKB aims to become the strategic owner of the bank by autumn of 2006 and plans to raise its stake to 100% in the near future.
The bank noted that the transaction still requires approval from both the Romanian and Hungarian financial authorities. MKB said its strategy for the bank includes expanding its geographical coverage from 54% to 91% of Romania with a total of 150 branches by 2015. Romexterra has at present 43 branches. By the same time, MKB aims to have 700,000 retail clients and 70,000 corporate clients, including 40,000 SME clients. The Romanian bank currently has 140,000 retail clients and 10,000 corporate clients.
MKB also believes the bank can attract multinational companies, especially Austrian, German and Hungarian ones. By 2010, MKB wants to raise Romexterra's share of the loan market to 3.8%, up from 0.8%, and its share of the deposit market to 3.6%, compared to 1.1% now. By 2015 it wants to have a 5.9% share of the loan market and a 5.5% share of the deposit market.
Romexterra closed 2005 with total assets of €302 million, net assets of €48.5m and after-tax profit of €4.7 million. MKB also plans to carry out big developments at Romexterra's two units: Romexterra Leasing, in which Romexterra Bank holds 89.6%, and Romexterra Finance, in which it holds 69.29%. It plans to launch investment funds, offer new services, and set up pension and health funds. It will target middle-class clients who require sophisticated banking services, much the same group MKB Bank caters to in Hungary. The private banking market also has a high priority. MKB plans to make Romexterra a market leader in electronic services and an important player in the Romanian bankcard business.
MKB said in December 2005, that Bayerische Landesbank, its majority owner with 89.61% of shares, had decided to make MKB its bridgehead for regional expansion. MKB named Romania as one of the countries in which aimed to purchase a small or mid-sized bank. It already bought a bank in Bulgaria, Unionbank, which has a 1.5% market share, for an undisclosed price. The purchase was closed in May 2006.