BCR is a strategic asset for Erste and the arguments in favor of the EUR3.75 billion acquisition seven years ago still stand today, although all the bank’s operations are currently having to go through an evaluation process in search of a business model that allows a return to growth and to profit, said Manfred Wimmer, chief financial officer of Erste Group, who was formerly in charge of BCR’s takeover strategy in 2005.
“Since this is the largest bank in Romania, we have as a strategic objective to boost our presence on the corporate and retail segments, although we anticipate a stronger rise of the lending market for companies in the near future,” said Wimmer.
In the first half of 2008 he was interim CEO of BCR.
Wimmer said BCR will remain, after its restructuring, a universal bank committed to meeting demand on all market segments, but depending on the opportunities of achieving sustainable growth and a good enough return on equity in the medium term.
But before generating a good return, BCR is currently swallowing capital, with a fresh EUR110 million capital increase being approved last month after a similar one in 2011.
After the EUR3.75 billion transaction, Erste has injected funds into the BCR on a permanent basis, either as capital or as subordinated debts, Wimmer said. In hindsight, it is not the costs of integration that have been the highest, but those to do with the invested capital, subsequent acquisitions (SIF stakes) and the capital increases, he added.
Between 2006 and 2008 Erste collected dividends of around 1 billion lei (EUR230 million), and the bank’s profits in 2009 and 2010 were fully reinvested as capital increases.
The exposure of Erste Group to lending and the capital invested by the group in Romania peaked at EUR9.3 billion at the end of November 2012, from EUR8.6 billion in the middle of last year. According to Wimmer, Erste’s exposure will follow the rebound of consumer confidence and of economic growth.
He believes that political stability, lower inflation and reform of the public sector could generate significant interest for Romania from investors and that healthy growth could return.
“We are eagerly awaiting much more extensive infrastructure projects in Romania. We are ready to finance, provide consultancy and structure financing for infrastructure projects,” Wimmer said.
(English version by Daniela Stoican)