Bank Austria Creditanstalt (BA-CA) has purchased Hebros Bank in Bulgaria. The bank, which was created through the merger of eight state-owned banks in 1993, is being sold by SWC BV and SWR Investments, both independent investment management companies.
“By acquiring Hebros Bank we have significantly strengthened our market position in Bulgaria,” says Erich Hampel, CEO of Bank Austria Creditanstalt. “We are thereby increasing our market share to the level of 10 per cent that we have sought in this strategic core market.”
Hebros Bank has total assets of Euros 291 million (as at 30 June 2004) and a market share of 2.9 per cent, which makes it the tenth largest bank in the Bulgarian market. With a country-wide network of 92 offices and a total of 1,000 employees, the bank serves 210,000 customers. In 2000, it was sold to the Regent Pacific Group. The bank has been restructured and modernised over the past four years. Today, Hebros Bank uses a modern IT system and operates an extensive network of branches. The bank focuses on retail customers and small and medium-sized businesses.
BA-CA is already active in Bulgaria through its subsidiary HVB Bank Biochim. HVB Bank Biochim is currently the fourth-largest local bank, with total assets of Euros 793 million, some 1,500 employees, 151 branches and more than 400,000 customers. It is planned to integrate HVB Bank Biochim and Hebros Bank in 2006.
BA-CA says HVB Bank Biochim and Hebros Bank will together serve over 600,000 customers and – with combined total assets of about Euros 1 billion – become the fourth largest banking group in Bulgaria. Their combined market share of 11.6 per cent makes them Bulgaria’s second-largest lender. The two banks are also the market leader in the area of business loans, with a combined market share of 11.2 per cent. They rank third in the retail lending sector, with a combined market share of 12.6 per cent. In the deposits business the two banks are the number 4, with a market share of 9.7 per cent. “The two banks fit together perfectly,” says BA-CA’s CEO Erich Hampel. “This acquisition provides a strong base for our further growth in Bulgaria.”
Details of the purchase price have not been disclosed. “The purchase price is slightly higher than twice book value and is in line with the strategic importance of the acquisition,” says Hampel. “We expect significant synergies and an increase in the combined unit’s ROE by 2007.”
BA-CA acquires 90 per cent of the shares in Hebros Bank, with the remaining 10 per cent being acquired by HVB Bank Biochim, BA-CA’s subsidiary in Bulgaria. HVB Bank Biochim’s directly held equity interest in Hebros Bank ensures a direct link and close cooperation between BA-CA’s two Bulgarian banking subsidiaries from the very start. The remaining 0.1 per cent is held by minority shareholders. CA IB, BA-CA’s investment banking arm, and the Austrian law firm Wolf Theiss as well as Ernst & Young Bulgaria acted as adviser to BA-CA on this acquisition.