The EBRD and International Finance Corporation (IFC) are each taking a 12.5%, plus one share, equity stake in Banca Comerciala Romana (BCR), the largest bank in Romania, to support its eventual privatisation.
The combined US$222mn investment launches a three-phase strategy for the privatisation of the state-owned bank. The next step will be the sale of up to 8% of shares to employees of the bank, followed by the sale of the majority stake to a strategic investor by 2006.
The privatisation of BCR has long been seen by the Romanian government and the international community alike as a critical event in the development of the country’s economy. The agreement should signal confidence in the banking sector and the investment environment ahead of Romania’s accession to the EU, expected in 2007.
As part of the investment agreements, the EBRD, IFC and APAPS, Romania’s privatisation agency, will start to put in place an institution-building plan to prepare the bank for privatisation by supporting, among other things, business development, improved corporate governance, risk management and a review of strategy and operations.
Noreen Doyle, first vice-president at the EBRD, says the agreement is a result of the government’s strong commitment to pursue economic reforms that can further enhance the country’s transition process. Doyle adds that the EBRD and IFC will work with the bank’s management to further improve BCR, making it a more attractive institution to potential strategic investors.
Ovidiu Musetescu, president of the authority for privatisation and chairman of the privatisation commission of BCR, said that the signing of the share purchase agreement is of great importance for Romania and a strong indication of the government’s commitment towards economic reform. The EBRD and IFC participation will give fresh force to the development of this bank, adds Musetescu.
Khosrow Zamani, the IFC’s director of the Southern Europe and Central Asia department, says the IFC’s participation fits the corporation’s commitment to support the government’s efforts to banking sector reform, a key issue for the country’s planned accession to the European Union in 2007. Zamani adds that the IFC and EBRD’s involvement in the implementation of the institution building plan for BCR will catalyse increased investor interest and improve the terms and conditions for the bank’s privatisation.
Established in 1990, BCR has 285 branches and agencies across the country, employs over 11,500 staff and has over 3.8mn clients. The EBRD’s relationship with BCR dates to 1996, and both institutions have since worked to support entrepreneurs across the country. The EBRD has also extended BCR loans to promote mortgage lending across the country.