Belgium’s KBC Group has agreed to acquire United Bulgarian Bank (UBB) and Bulgarian leasing services provider Interlease from National Bank of Greece (NBG) in a deal worth €610m.
Under the arrangement, KBC will buy 99.91% of UBB that has an 8% market share in Bulgaria, and 100% of Interlease that has a 13% market share in Bulgaria.
Since 2007, KBC has been operating in the banking sector of Bulgaria through its subsidiary CIBANK. The group operates in the country’s insurance sector through DZI Insurance.
KBC said that the combined group would be the largest bank-insurance group in Bulgaria. The Belgian company would also become active in leasing, asset management and factoring in the country following the takeover of the businesses.
KBC would pay for the deal in cash, using internal sources/available funds.
The deal is expected to be completed during the second quarter of 2017, subject to antitrust and regulatory approvals including that of the Bulgarian National Bank, Financial Supervision Commission of the Republic of Bulgaria, National Bank of Belgium/ the European Central Bank.
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KBC said that the deal would have a very limited impact on its capital position and would keep its CET1 ratio well above minimum capital standards.
Prior to deal closing, UBB plans to make a €183m extraordinary dividend payment to NBG subject to approval of the Bulgarian National Bank.
KBC Group CEO Johan Thijs said: “The acquisition of United Bulgarian Bank constitutes a logical and important step in KBC’s expansion in Central and Eastern Europe, which started nearly two decades ago. KBC has been present in Bulgaria since 2007 when it acquired CIBANK and DZI Insurance. In 2009, Bulgaria was defined as a core market in KBC Group’s strategy.
“KBC’s stated strategy is to be the market leader in its core markets, i.e. to occupy a top-three position in banking and top-four position in insurance. The combination of CIBANK and UBB will create the third-largest banking operation in the country, allowing KBC to strengthen its position from a current number nine.”
NBG CEO Leonidas Fragkiadakis said: "After almost 15 years of successful presence in Bulgaria, NBG divests from UBB and Interlease to deliver on its commitment to the shareholders and the European Authorities. The Transaction further strengthens NBG’s position in terms of capital and liquidity, allowing for the redeployment of resources to support the Greek economic recovery.”