EFG’s foray in Serbia

BELGRADE – Greece’s EFG Eurobank has completed the takeover of Serbia’s National Savings Bank in a deal that lifted its stake to 62.3 percent and added more than three times as many branches. Greece’s third-largest lender by assets said yesterday it had paid 41.5 million euros ($50 million) for a 52.5 percent stake in the mid-sized bank and that the acquisition would expand its Serbian network to almost 100 branches from 22. The price, the highest so far paid for any bank in Serbia, valued National Savings Bank – Nacionalna Stedionica – at about five times its book value. «We intend to invest further in this bank, strengthening its capital base in the very near future. We will provide whatever is necessary to ensure its dynamic growth,» David Watson, head of EFG’s international division, told reporters in Belgrade. With Nacionalna, EFG has increased its market share to 3.3 percent in terms of assets, 3.6 percent in terms of deposits and 6.5 percent in terms of number of branches. EFG plans to nearly double its work force in Serbia to 3,000 from 1,400 in the next couple of years, Watson said. «Serbia’s economy has a strong growth potential. The two banks together now have a market share of between 4 and 6 percent, and our goal is to be where we are in Greece – between 15 and 30 percent of the market,» Watson said. EFG entered the Serbian market in 2003 by acquiring Post Banka and building it up to a network of 20 branches. Its Guernsey-based arm, Berberis Investment Ltd, began buying shares in NSB on the Belgrade Stock Exchange in May and has built up a 10 percent stake for 3 million euros. EFG needs to boost its stake to at least 66 percent to prevent the government, which owns the remaining 37 percent in National Savings Bank, from blocking its decisions on mergers or the closing of branches. The government has decided not to sell its stake to EFG now but rather to negotiate a three-year put option. The government set up Nacionalna Stedionica to boost confidence in the banking sector in early 2002, days after it closed four big, debt-laden banks. The bank took over some of the premises and workers of the closed banks. Serbian bank assets rose 41 percent in 2004 to 6.5 billion euros and expanded further by 14 percent in real terms in the first half of 2005. EFG also has a presence in Bulgaria and Romania and plans to establish retail operations in Poland by January next year. In another development yesterday, Serbia yesterday gave potential investors a November 7 deadline to express interest in purchasing a 99 percent stake in Vojvodjanska Banka, the nation’s fourth-biggest lender by assets. More bank sales Vojvodjanska, with assets of 463.5 million euros ($556.5 million) in 2004, will be privatized with the help of Nomura International as financial adviser. Bidders must have experience in retail banking, at least 10 billion euros’ worth of consolidated assets in 2004 and a credit rating of at least «Baa3» assigned by Moody’s or «BBB» by Standard & Poor’s, said the invitation published in Politika daily. Vojvodjanska, which last year held a 15 percent market share, was among 16 banks nationalized in 2002, when the central bank decided to swap their debts to foreign lenders into state-held equity. It escaped closure in 2002, when Serbia shut four big debt-laden banks. Serbia plans to finish selling its bank holdings in 2006 and will use the receipts to service its foreign debt. Earlier this year, the government sold control in Novosadska Banka to Austria’s Erste Bank, while Greece’s Alpha Bank bought Jubanka and Slovenia’s Nova Ljubljanska Banka acquired Continental Banka.