Banca Transilvania moves into Moldova

Moldova’s crisis-hit banking sector moved a step closer to recovery with the announcement in November that Romania’s Banca Transilvania has agreed to take over troubled lender Victoriabank, says

News of the acquisition, which will be the first by a foreign bank in Moldova since 2007, came almost exactly three years after $1 billion was stolen from three of the country’s leading banks in as many days. The resultant bailout cost more than 10% of Moldova’s annual GDP and prompted an overdue clean-up of the banking sector.

As well as the closure of banks involved in the fraud, this saw three other lenders – Victoriabank, Moldova Agroindbank (MAIB) and Moldinconbank – put under central bank supervision over concerns about corporate governance.  Owners of substantial stakes in all three subsequently had their voting rights suspended and were ordered to dispose of their holdings.

Victoriabank, Moldova’s third-largest lender, is the first to find a buyer. Banca Transilvania will acquire an initial 39.2% stake in the lender from Insidown, a Cyprus-based company registered to a little-known Russian businessman.

“The announcement by Banca Transilvania is important and symbolic,” says Sergiu Cioclea, Moldova’s central bank governor. “It means banking reforms are starting to bring results and the market is becoming attractive for strategic investors.” The deal also marks the first step outside its home market for Banca Transilvania, which has expanded rapidly in recent years to become Romania’s number two lender.  Chief executive Omer Tetik says the group previously had no intention of pursuing a regional development strategy but “chose to be responsive to a natural expansion towards a very close market, both historically and geographically.

“There are also economic reasons for this move,” he adds, “as Moldova is a region with significant potential in the SME (small and medium-sized enterprise), micro and retail sectors, all of which are business segments in which Banca Transilvania has the necessary experience and know-how.” The acquisition has received strong support from the EBRD, which has been a prime mover in the drive to clean up Moldova’s banking sector. The development bank is a long-term shareholder in Victoriabank; last June it upped its stake in the lender to 27.5%. The EBRD also owns 8.6% of Banca Transilvania.

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