Intesa Sanpaolo will take over the loan portfolio, the deposits, as well as the territorial units and the employees of CR Firenze. The resulting entity will assets of almost 5 billion lei and a market share of 1.4%, according to information in the merger proposal.
Although the impact on the banking system is a limited one considering the low size of the two banks, this is the first move towards market consolidation – something that has been discussed for several years, but no concrete action has been taken.
A merger between Alpha Bank and Bancpost was also discussed last year, given that the parent banks themselves were supposed to merge. But the plan was abandoned because Alpha changed its mind, deeming it would put it at a disadvantage, given the effect that the restructuring of Greece’s debts would have on Eurobank, the parent bank of Bancpost.
The merger of Intesa Sanpaolo and CR Firenze, both controlled by Italian group Intesa, had been discussed for several years, but was put off as the crisis hit.
Intesa ranked 19th in the banking system at the end of last year, with a market share of 1.2%, while CR Firenze was just 31st, with a market share of 0.2%. The new entity could climb a few positions in the banks’ ranking, from Intesa’s current position.
The merger was approved by the shareholders last summer, and recently Intesa has started proceedings to get the approval of the BNR or Romanian central bank. The two banks also need to receive the final approval of the shareholders.
“The merger of the banks into one single player on the banking market is a logical and natural step in the process of consolidation of the Intesa group on the local market through the acquisition of 100% in CR Firenze over the course of 2011,” the merger proposal reads.
Intesa is held by Intesa Sanpaolo and Intesa Sanpaolo Holding International, while the shareholders of CR Firenze are Cassa din Risparmio di Firenze and Sanpaolo Holding International. Casa di Risparmio di Firenze is controlled by the Intesa group.
The Italians hope the merger will bring their costs down through a simplification of the management structure and the use of a joint IT platform, and that sales will become more efficient by avoiding an overlapping of the products and by distributing them under one brand – Intesa.
The two banks currently have the highest cost/income ratios in the Romanian banking system – 77% in the case of Intesa and 90% in the case of CR Firenze, while the banking system average is around 55%.
Intesa last year posted losses of RON156 million because of very high provision costs, while CR Firenze reported a RON6.3 million profit.
The date for the completion of the merger has not been set yet, and depends on the receipt of the necessary approvals. But the draft merger sets out clearly who will run the new bank – the current managers of Intesa Sanpaolo.
Intesa has been run by Italian Ezio Salvai since last summer. As for CR Firenze, it has been run by Ioan Mihail Anca for three years.
As a result of the merger, Intesa will add 16 branches and agencies to its territorial network and will take over 180 employees. The bank’s share capital will increase by RON 72.5 million, with 7.2 million shares to be issued by Cassa di Risparmio Di Firenze and Intesa Sanpaolo Holding International. The exchange rate has been set at 2 CR Firenze shares per one Intesa share. So, Cassa di Risparmio Di Firenze will have a stake of around 8% in the new entity.
(English version by Daniela Stoican)