Banking sources say the takeover contract draft is being devised and unless something unexpected happens, the two parties will sign the agreement in a matter of weeks.
Millennium put its Romanian bank up for sale last year, ending a seven-year stint on this market, where it invested several hundred million euros in the hope of building a bridgehead like it had done in Poland. At the end of May, however, Millennium ranked 21st among banks in Romania, with a market share of 0.7%.
The crisis upset its plans and the trouble in Lisbon put Millennium in the position of having to try to sell as many of its subsidiaries abroad as it could including Romania.
OTP arrived in Romania in early 2000’s when it bought Robank and has tried to boost market share over the years, showing interest in buying BCR, Banca Transilvania (TLV.RO), Banca Tiriac, Banca Carpatica (BCC.RO) and RBS.
Since talks over the aforementioned banks did not end in a deal, OTP continued to grow organically, reaching 1.3% market share at the end of May, and ranking 17th among the 40 banks operating in Romania.
Millennium got several bids and eventually held extended talks with OTP and Raiffeisen, choosing OTP.
Some sources say the deal covers some of the equity capital of Millennium Bank. One of the topics of the negotiations with Millennium was the about EUR150 million line of credit from the parent bank in Lisbon, which has to be repaid.
Millennium Romania has 56 branches, half a billion euro net assets and 500 employees.
OTP has 84 branches, 900 employees and EUR1.47 billion assets. The takeover puts OTP on the 13th place, where it can challenge Garanti Bank (12th, 2.2% market share) and Piraeus Bank (11th, 2.5% market share). To climb as far as the top ten, OTP needs to buy something again, be it another bank or a significant loan portfolio from another lender.
From a market with exponential growth potential, Romania has become a place most banks want to leave. The low penetration of banking services and financial intermediation, and the weak prospects for growth of the banking market, which is now spending time managing non-performing loans rather than granting loans are making Romania a totally unattractive place.
(English version by Loredana Fratila-Cristescu)