J.C. Flowers is officially in talks to buy Piraeus Bank and its next targets might be Credit Agricole Romania and Banca Romaneasca, market sources say.
The US fund got the green light from Romania’s central bank to buy several lenders, as well as do some cleanup in the balance sheets of those it is interested in and consolidate a heavily fragmented market, where too many small banks have been struggling to survive after the crisis because they lack the critical mass that would allow them to develop.
Credit Agricole Romania, the subsidiary of the French-held Credit Agricole acquired via a deal in Greece, which entailed exit from the Emporiki Bank, has been up for sale for more than a year now. Banca Romaneasca, too, has had suitors such as Banca Transilvania looking through its financial data and statements.
The US private equity fund has enough money to sustain such a banking blitzkrieg, which would get it a 5.7% market share if it successfully took over the four banks.
J.C. Flowers is extremely discreet about its plans and the only statement it made so far has been about Banca Carpatica, which is traded on the Bucharest Stock Exchange.
Romania has 40 banks and the ten largest of them account for 80% of the market. The seven years of crisis made a significant impact on all the banks, turning investment in small lenders into a really unprofitable business, which eats cash and has no future as it is.
The stricter capital and supervision requirements will make many banks throw in the towel, but the problem will be finding buyers.
Except for J.C. Flowers, which appeared out of nowhere in Romania, there are no other investors with the money and determination needed to participate in the consolidation of the market by acquisitions.
Romania’s central bank is supportive of a consolidation of the market by acquisitions because it needs banks with sound capital and powerful shareholders able to cope with all sorts of turmoil.
(English version by Loredana Fratila-Cristescu)