Banca Transilvania in Talks to Buy Volksbanken Romania

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Banca Transilvania SA, Romania’s third-biggest lender, is in talks to acquire Oesterreichische Volksbanken AG’s local unit in a transaction that may help the struggling Austrian bank overcome its capital shortfall.

Transilvania, based in Cluj Napoca in western Romania, hasn’t taken a final decision on the purchase of Volksbank Romania SA, the bank said in a statement. OeVAG spokeswoman Petra Roth also confirmed the talks. OeVAG owns 51 percent of VBRO, while Germany’s DZ Bank AG and WGZ Bank AG and France’s Groupe BPCE hold a combined 49 percent.

“A possible decision regarding the successful completion of the Volksbank talks will be announced after all legal steps have been done and all approvals obtained,” Transilvania said. “Bank officials are confident about formalizing a future acquisition of a bank or loan portfolios that will add value to the bank.”

OeVAG’s Romanian business was the only part shunned by OAO Sberbank when the Russian bank bought OeVAG’s eastern European unit in 2012. It has led to losses for the cooperative Austrian lender and contributed to its failure in the European Central Bank’s stress test last month.

Bucharest-based VBRO had a net loss of 103.6 million euros last year and total assets of 3.1 billion euros ($3.9 billion), according to a factsheet on OeVAG’s website. Net income at Banca Transilvania rose 41 percent to 338 million lei ($95 million) in the first nine months of this year as assets grew. The bank said earlier it’s seeking acquisitions.

Bad Debt

Romania’s banks have one of the highest rates of bad debt after the economy contracted in 2009 and 2010. Its two biggest banks are Banca Comerciala Romana, a unit of Austria’s Erste Group Bank AG, and BRD-Groupe Societe Generale SA.

OeVAG is the central institution of cooperative banking group Volksbanken-Verbund, which was found to have a an 865 million-euro capital shortfall in the ECB’s stress test last month. To fill the gap, OeVAG plans to become a wind-down vehicle, return its banking license and transfer operating functions to one of its owners.

It needs to sell VBRO by the end of next year to comply with European Union conditions for 1.35 billion euros of Austrian state aid. The group already sold most of its eastern European leasing business this year and put its factoring bank and domestic leasing business up for sale as well.

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