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November 15, 2021

KBC to buy Raiffeisen Bank International’s Bulgarian business for €1bn

By Verdict Staff

Belgium-based KBC Bank has agreed to purchase the Bulgarian operations of Austria-based Raiffeisen Bank International (RBI) for approximately €1bn in cash.

The deal covers Raiffeisenbank Bulgaria’s fully-owned subsidiaries Raiffeisen Leasing Bulgaria, Raiffeisen Asset Management (Bulgaria), Raiffeisen Insurance, and Raiffeisen Service.

The transaction is expected to close by the mid of next year, subject to regulatory approvals.

Raiffeisenbank Bulgaria

RBI started its banking operations in Bulgaria in 1994. The unit, Raiffeisenbank (Bulgaria), provides a range of asset management, banking, leasing and insurance brokerage services to retail, SME and corporate customers.

It has a market share of 7.9% in assets and 8.4% in loans with a network of 122 bank branches across the country.

The bank has 2,500 staff catering to 635,000 customers.

At the end of H1 2021, the unit had a €3.3bn loan portfolio, €4.2bn deposits and €5.2bn assets and net profit of €27m. Its CET1 ratio at first half of the year stood at 16.4%.

Deal Rationale

The purchase expands KBC’s footprint in Bulgaria financial market, in which it maintains a presence since 2007.

The bank operates in the country through United Bulgarian Bank (UBB), DZI (Insurance), UBB Interlease, UBB Pension Insurance, UBB Asset Management, UBB Factoring, UBB Insurance Broker and KBC Branch Bulgaria.

Following the closure of the deal, KBC intends to merge Raiffeisenbank (Bulgaria) and UBB to further solidify its position in the Bulgarian banking market.

The combined entity is expected to have 18.2% market share by assets and 17.0% proforma market share in terms of loan.

In addition, the acquisition will scale up UBB’s market share in the asset management business and is expected to deliver cross-sales opportunities with DZI in the insurance area.

Comments

KBC Group CEO Johan Thijs said: “We’re extremely happy to acquire a high-quality business with an excellent reputation and management team. Its clear focus on innovation and digitalisation, combined with a high customer satisfaction rating, mirrors our own Digital First strategy and will allow us to further expand our Bulgarian business, reaffirming our leading position in the Bulgarian financial market.”

KBC in Bulgaria country manager Peter Roebben added: “Expanding our activities in Bulgaria, integrating Raiffeisenbank’s high-end products while building on the competence and dynamism of both UBB and DZI, will help us to achieve our objectives and ensure future success.”

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