The Scottish firm also bought around 2.8% in BRD in the past few years, being the biggest buyer.
On Thursday, May 23, Aberdeen Asset Management was reported on the Bucharest stock exchange with a holding of 37.8 million BRD shares, i.e. 5.43% of the shares of Romania’s no. 2 bank.
The stake makes the Scottish firm the bank’s second-largest shareholder after French group Societe Generale, with 60.16%. At Thursday’s closing market price of 8 lei/share the 37.8 million shares are worth RON302.4 million (EUR70 million).
“At present, BRD is the only equity investment Aberdeen has in Romania. We hold around 44 million shares in the bank, valued at a little under RON360 million,” William Scholes, assistant investment manager at Aberdeen Asset Management, told ZF.
The Scottish firm is one of the world’s largest investment managers, with the EUR250 million assets it manages making it 60th in the world, according to a ranking put together by US company Towers Watson.
Taking into account the stake reported by the Aberdeen official, the Scottish firm is set to hold 6.3% in BRD. In 2010 Aberdeen funds held 0.37% in BRD, which means they were some of the most active investors in the bank’s shares, while regional financial investment funds SIFs sold BRD shares massively.
The announcement made by Aberdeen comes after BRD-SG has been through a difficult period in the past year, with the bank’s shares recovering only recently after last year the shares had reached historic lows.
BRD was for several years in the past the most profitable bank in the Romanian system, but last year it recorded the first annual loss in its history, RON332 million because of a rise in costs related to non-performing loans.
In the first quarter of 2013 the bank showed signs of a slight recovery, returning to profit. BRD recorded a net profit of RON13 million, 84% lower than in the first quarter of 2012 and the volume of loans granted was up 2%.
“We continue to believe that BRD is a well-run bank and part of a good quality global network, and while the current environment in Romania is proving tough with narrow margins and asset quality deterioration, these periods offer a good opportunity for long-term investors to take advantage of attractive valuations,” William Scholes also said.
BRD shares have recorded a modest 0.49% rise since the beginning of the year, below the 36% rise recorded by the shares of Banca Carpatica, but better than the 5% decline of Banca Transilvania shares.
BRD shares are currently down 17% against the year-ago period, while the rest of banking shares listed in Bucharest are on the rise.
The holding was announced on the Bucharest stock exchange just one day after another announcement made on the London stock exchange, where the Scottish firm is listed: on May 22 Aberdeen Asset Management announced it had finalized the acquisition of US investment firm Artio Global Investors. Aberdeen paid $180 million for the acquisition of the US firm which in 2007 was the biggest investor on the Bucharest stock exchange.
Because of poor results, Artio funds ended up one step away from liquidation, having to sell large amounts of shares and fire employees in order to be able to deal with the withdrawal of billions of dollars by investors unhappy with the results. In the past five years Artio funds reported record-high withdrawals of $30 billion from unhappy clients, having to sell the bulk of their holdings on the Bucharest stock exchange. Artio funds sold massively shares in OMV Petrom and were left with around 2.7% in BRD, a stake that was taken over by Aberdeen.
In April 2013, before the takeover transaction, Aberdeen funds had a 2.5% stake in BRD, so by taking over Artio investments, the Scottish firm has come to hold 5.43%.
“Aberdeen funds have long been investors in BRD shares, probably since back in 2004-2005. Aberdeen entered the Romanian bourse mainly with its funds specializing in investments in financial stocks, this is how the BRD holding can be explained. They are long-term investors and choose the companies to invest in based on the management’s performance,” says Ovidiu Fer, analyst at brokerage Wood&Co and vicepresident of the Professionals of the Capital Market Organization.
Considering the 5.43% holding reported in Bucharest worth EUR70 million, Aberdeen is one of the biggest foreign investors on the Bucharest stock exchange, alongside Sweden’s East Capital funds.
However, Aberdeen manages assets of EUR250 billion on markets in Europe, the US and Asia, so the Romanian equity market is marginal for the Scottish firm.
(English version by Daniela Stoican)