Bank Of Cyprus Romania Put Up For Sale. First Bidder: Banca Transilvania

04.02.2013 By Cristian Hostiuc

Banca Transilvania (TLV.RO) has placed a non-binding bid to buy the operations of the Romanian branch of Bank of Cyprus, market sources told ZF.

Cluj-based Banca Transilvania has shown interest in taking over the Romanian operations of Bank of Cyprus, by submitting a non-binding bid, according to sources from the banking market, as the Cypriot authorities started an overnight process to find a buyer.

The relationship between the Bank of Cyprus and Banca Transilvania is very tight because the Cypriot bank has held 9.8% in Banca Transilvania for the last three years.

In a race against time the Romanian and Cypriot banking authorities are seeking a buyer for Bank of Cyprus in Romania, after the bank announced on Monday morning it was suspending its operations on the local market for a week starting April 1.

The banking crisis in Cyprus broke out two weeks ago, and is set to lead to the closure of the second-largest bank in the island – Laiki (Cyprus Popular Bank), plus the haircut of deposits in excess of EUR100,000 according to a very complicated mechanism.

The Romanian central bank, the Cypriot central bank, Bank of Cyprus and the European Banking Authority have had ongoing talks on what will happen from now on with the Bucharest operations of the two Cypriot banks – Bank of Cyprus and Marfin (Laiki) – seeking solutions to stop the crisis from spreading further.

The temporary suspension of the Bucharest operations of the Bank of Cyprus, effective as of Monday, was a measure meant to protect Romanians who hold deposits of over EUR100,000 from the Cypriot authorities’ decision to levy a tax of up to 60% on such deposits.

If a buyer is found, these deposits would be protected in full.

Nicolae Cinteza, director of the Supervisory Department of the Romanian central bank, told Mediafax Tuesday that a non-binding offer had been filed to take over Bank of Cyprus Romania and that talks were being held with the Cyprus parent bank and with the supervisory authority.

He did not give the name of the bank that had filed the bid.

Banca Transilvania had not commented on the matter by deadline, either.

Whoever takes over the Bucharest operations will have to be able to pay the deposits and take over the loan portfolio. According to the latest available data, Bank of Cyprus Romania had deposits of EUR245 million and loans of EUR570 million at the end of September.

The value of deposits is currently lower, considering that there have been withdrawals, especially after the crisis broke out two weeks ago.

According to market sources, Bank of Cyprus Romania has a rather sound loan portfolio, which has been coveted by several banks. Its main asset is an over EUR100-million loan granted to the company that owns five-star hotel Marriott, according to the securities guarantee archive.

After a decision is made on Bank of Cyprus Romania, next up is Marfin Bank Romania, which also needs to find a buyer.

(English version by Daniela Stoican)