Acquisition of Volksbank Romania by Banca Transilvania

In the largest deal in the Romanian banking sector in the last 10 years, VCP advised Banca Transilvania on the acquisition of 100% of Volksbank Romania

Date: 2015
Country: Romania
Industry: Financial services
Target: Volksbank Romania
Buyer (client): Banca Transilvania
Seller: 51.0% Österreichische Volksbanken-AG, 24.5% Groupe BPCE, 16.4% DZ Bank, 8.1% WGZ Bank
VCP’s role/competence: buy-side M&A advisor

• In 2011, Österreichische Volksbanken AG (“ÖVAG”), the majority shareholder of Volksbank Romania (“VBRO”), was rescued by the Austrian state and committed to dispose all of its non-core assets by the end of 2015, including its stake in VBRO. Therefore, ÖVAG was preparing to sell VBRO in an auction-like sales process to start in April 2015.
• VBRO was considered as difficult asset. It was market leader in CHF mortgage loans (accounting for 29% of VBRO’s total loan book), an asset class which resulted in substantial levels of non-performing loans and numerous litigations against the bank due to constant pressure from consumer protection groups and the National Bank of Romania.
• VCP identified Banca Transilvania (“BT”), at that time third largest bank in Romania, as attractive buyer as is appeared to be the only player on the market that could handle the difficulties of VBRO and immediately repay a large amount of VBRO‘s parent funding of €1bn.
• After being mandated by BT, VCP positioned its client to pre-empt the planned sale process and organised bilateral talks with the shareholders.
• In only three-months, we coordinated an intensive due diligence and negotiations process, developed the valuation framework and combination accounts analysis and guided our client through extensive SPA negotiations (on funding mechanisms, transaction structures, signing and closing considerations, pricing, etc.).
• On 10 December 2014, BT announced the acquisition of VBRO, closing took place in April 2015, after the necessary approvals have been obtained. The consideration paid by BT amounted to €711m, of which €81m for capital and €630m for the repayment of parent funding. The consideration fully reflected VBRO’s multiple issues, the limited set of potential buyers and the shareholder’s pressure to sell.
• Through the acquisition of VBRO, BT became the second largest bank in Romania with a market share of 13.5% and grants BT access to a new category of clients.