May 26, 2005

INTERVIEW: Romania Wants To Sell BCR Bank By Year End-PM

BUCHAREST -(Dow Jones)- Romania plans to sell off its stake in Banca Comerciala Romana (BCR.YY) by the end of this year, Prime Minister Calin Popescu Tariceanu said in an interview Thursday.

"The plan is to sell a stake of at least 50% plus one share in BCR to a strategic investor that must be a reputable bank," Tariceanu told Dow Jones Newswires.

The government might invite investors to express interest in Romania 's largest bank as early as next week, with the aim to complete the privatization by the end of the year, he said.

Romania will also launch the sale of a majority stake in state-owned savings bank Casa de Economii si Consemnatiuni, or CEC, this autumn, Tariceanu said. This sale is expected to be completed the second quarter of 2006.

The two sales would effectively place the entire Romanian banking sector under the control of foreign banks. Germany 's Deutsche Bank AG and Italian banks Unicredito Italiano SpA (UC.MI) and Banca Intesa SpA (BIN.MI) are reportedly considering buying BCR.

Parties interested in bidding for CEC include Erste Bank AG (EBS.VI) and Raiffeisen Zentralbank Oesterreich AG (RZO.YY) of Austria , French-Belgian bank Dexia SA (DEXB.BT), Rabobank Groep (RBK.YY) of the Netherlands , Hungary 's OTP Bank Rt. (OTP.BU) and Greece 's EFG Eurobank Ergasias (EUROB.AT).

Tariceanu said the government decided to sell BCR ahead of CEC because it needs more time to work out a privatization strategy for the savings bank.

He said he doesn't expect the two privatizations to affect each other, as each bank has its own group of interested investors.

BCR's privatization plan was approved by the cabinet Thursday. It gives major shareholders, the European Bank for Reconstruction and Development and the International Finance Corp, room to decide the exact size of the stake to be sold.

The Romanian government currently owns 36.88% of BCR, while the EBRD and IFC own a joint 25% stake. The rest is owned by bank's employees, which hold 8% and five investment funds with 6% each.

EBRD and IFC bought their stake in BCR last year for $222 million and have an agreement with the Romanian government to sell back all or some of it if a strategic investor is interested in buying a majority.

To sell at least 50% plus one share, the government would sell all or part of its stake and add all or part of the stake owned by EBRD and IFC.

"We try to get greater flexibility through this privatization strategy," Gabriel Zbarcea, the head of the government's privatization agency AVAS, said in a separate interview.

According to the privatization plan, any residual stake in BCR owned by the government will be floated on the local or a foreign stock exchange.

Zbarcea said the BCR plan has been discussed with EBRD and IFC.

With total assets of some EUR6 billion, BCR has a 26% market share in Romania . The bank reported 4.5 million customers at the end of 2004, and a net profit of EUR161 million.

CEC is Romania 's wholly state-owned savings bank - the only bank in which deposits are fully guaranteed by the state. After privatization, CEC would lose the state guarantee. It has a network of about 1,400 branches and offices, the largest in Romania and assets total about EUR1.1 billion.