Raiffeisen Unit CEO Sees Romanian Bank Consolidation This Year

Romania’s banking industry should see a period of consolidation this year as lenders focus on boosting market share amid a stagnating economy, Raiffeisen Bank Romania’s Chief Executive Officer said.

At least five banks may be for sale in the Balkan nation, Raiffeisen’s Steven van Groningen, whose bank announced last week it will buy the retail loan portfolio from Citigroup Inc.’s Romanian unit, said in an interview in Bucharest yesterday. He declined to name the banks or their nationality.

“There were always more sellers in the market,” van Groningen said. “I would certainly expect more transactions this year” and “it’s a relatively good moment to spend energy on integrating a portfolio, for example, as there isn’t a lot of growth in the market.”

Romania’s banking system is struggling with rising bad loans as economic growth remains sluggish, rising 0.1 percent in the fourth quarter from the previous three months. The industry posted the third consecutive year of losses and incurred a total loss of 2.1 billion lei in 2012 as the ratio of non-performing loans soared to 18.2 percent, Ziarul Financiar reported Feb. 12.

Raiffeisen Bank International AG’s Romanian unit will focus on integrating Citi’s Romanian retail portfolio into its operations this year, while also looking at other potential purchases on “an opportunistic basis,” van Groningen said. The Romanian banking industry, dominated by western European banks, has been struggling to reverse losses for the past three years, as a stagnating economy makes it difficult for citizens to repay their loans.

Portfolio Takeover

Raiffeisen’s deal with Citi is expected to take effect in the third quarter, as the unit takes over a portfolio with more than 100,000 customers, more than 90 million euros ($115 million) in gross assets and more than 175 million euros in deposits as of Dec. 31, the two banks said in a joint statement on March 21. Van Groningen declined to give the value of the transaction, whose terms aren’t public.

“You cannot do a transaction like this every week, not even every month. Our focus is now on integrating this, that’s our priority,” van Groningen said. “I’m willing to look on an opportunistic basis at whatever appears on the market, but again, I’m very realistic about what we can absorb in a certain timeframe.”