The merger of UBB and Raiffeisenbank may rearrange the top 3 banks in our country (review)

With the deal for a record 1.015 billion euros, a new giant is being created in this market in Bulgaria

The Management Board of the BNB has adopted a decision giving preliminary approval to the transaction in which UBB acquires Raiffeisenbank’s business in our country. This is clear from a message on the website of the central bank.

The deal was announced at the end of last year and is the next big one on the banking market in the last nearly 5 years. The record price so far is EUR 1.015 billion. It is mentioned in the official announcement of the owner of UBB – the Belgian financial group KBC.

It is undoubtedly the largest amount for which someone acquires a bank in Bulgaria. Experts calculated that this is how the Austrian owner of Raiffeisenbank will part with its Bulgarian asset, receiving in advance 13 times its estimated profit for 2022.

KBC explained at the time that through the merger, they expect the benefits of synergies to grow rapidly – from around €12 million in 2022 to approximately €29 million in 2024, and to remain at estimated levels in excess of €25 million. over the period from 2025 to 2031, and these are pre-tax figures.

And the Austrians from Raiffeisen explain the sale with the opportunity to redirect capital to attractive growth opportunities in key markets.

The merger of the assets of UBB and Raiffeisenbank will approach the impressive BGN 25 billion. If this amount is exceeded, there may be a shift in the top three banks in our country, where UBB is currently in third place, ahead of it is only UniCredit Bulbank and Bank DSK.

According to KBC’s accounts, the combined company – Raiffeisenbank Bulgaria and UBB will reach 18.2% market share, against 19.8% and 18.4% of the two competitors, respectively. Analysts have calculated that this means 3/4 of the banking system’s assets are held by the three giants at the top.

The deal also includes the acquisition of Raiffeisen Leasing Bulgaria with a 10.5% market share, the asset management company Raiffeisen Asset Management Bulgaria with 9.7% of the market, Raiffeisen Insurance Broker, which sells the products of 12 companies, and also Raiffeisen Service.

For the first time, the name of KBC appeared in our country in 2007, when it acquired a majority stake in the medium-sized Sibank. Then the Belgians bought 75% of it for 295 million euros. In the following years, they also bought the rest of the shares. At the same time, in 2007, the Belgian group also acquired 70% of the insurance company DZI for 260 million euros, where the share was also gradually increased to 100%.

KBC’s biggest deal happened in 2016 and was finalized a year later. Then they acquired UBB and “Interlease” from the National Bank of Greece for 610 million euros, which at that time was one of the largest banking transactions in our country.

KBC’s last purchase was of the pension company NN for EUR 77.7 million, which is fifth with BGN 2 billion in assets. The company has now been rebranded as “OBB pension insurance” and completes the missing piece of the group’s financial services.

KBC also invests in outsourcing services for the whole group. A shared service center was opened in Varna in 2019, and a new digital technology center was announced in 2021.

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