Despite little to no mergers and acquisitions activity in Romania in 2010 and the first half of 2011, “Romania looks overbanked in terms of banking sector infrastructure and the number of banks operating in the country,” the report notes.
As such, many smaller local-owned banks are expected to report losses in 2011, which makes them ripe for takeover or recapitalization, according to the report.
Possible targets for mergers and acquisitions, in Raiffeisen’s view, include Banca Transilvania, CEC and Volksbank Romania.
Banca Transilvania, with assets worth some EUR5 billion, lacks a strategic investor. Bank of Cyprus holds a 10% stake here, while the European Bank for Reconstruction and Development and the International Finance Corporation hold 18%.
State-owned CEC has assets worth EUR5.1 billion, and it has been a candidate for takeover for some years now, according to the Raiffeisen analysts. The state has repositioned the bank and injected capital into it.
Volksbank Romania’s fate is uncertain. Austrian group Volksbank was unable to sell the Romania unit when it sold the Central and Eastern Europe operations to Sberbank.
At the end of June, the Raiffeisen group had over 6,000 employees and 544 branches in Romania, Serving some 1.939 million clients, 100,000 SMEs and over 6,800 medium and large companies.
In the first half of the year, the bank registered a net profit of EUR40 million in Romania, down 23% from EUR52 million in the same interval of 2010, following an increase in expenditure and the reduction of revenue from commissions, financial investment and derivatives.
The assets held by Raiffeisen Bank International in Romania declined in the first half to EUR6.172 billion, from EUR6.227 billion in the beginning of the year.