Belgium’s KBC buys United Bulgarian Bank and Interlease for €610mn

By bne IntelliNews January 1, 2017

Belgian-based KBC Group said on December 30 that it is acquiring United Bulgarian Bank (UBB) and Bulgarian leasing services provider Interlease for a total consideration of €610mn. The National Bank of Greece (NBG) sold 99.9% of UBB and 100% of Interlease.

With total assets of €3.7bn at end-September, UBB is the fourth-biggest bank in Bulgaria, with a market share of 8%. Interlease is the third-largest provider of leasing services in the country, with a market share of 13%.

KBC will pay the acquisition price in cash using internal sources/available funds. Before the deal is closed, UBB intends to make a €183mn extraordinary dividend payment to NBG that must be authorized by the Bulgarian National Bank.

“The purchase price reflects the 183-million-euro extraordinary dividend and represents a 1.10x multiple of the 2016 expected tangible book value of UBB and Interlease and a 1.29x implied multiple of the 2016 expected tangible book value adjusted for negative net asset value adjustments amounting to €81mn which KBC identified during the due diligence process”, the press release said.

KBC is already present in Bulgaria, after acquiring commercial bank CIBANK and insurer DZI Insurance in 2007. The Belgian group said that collaboration in the field of bank-insurance between the two has grown significantly in recent years. At end-September, CIBANK had total assets of €1.5bn and was the ninth largest Bulgarian bank in terms of this indicator.

The combination of UBB and CIBANK will create the third-largest banking group in the Balkan country with a market share of approximately 11%. Furthermore, UBB-CIBANK and DZI will become the largest bank-insurance group in Bulgaria, one of KBC’s core markets, which has strong macroeconomic fundamentals and significant under penetration of financial services compared to Western European markets, KBC said. After the takeover, KBC will also become active in leasing, asset management and factoring in Bulgaria, offering its customers a full range of banking services.

The acquisition is subject to regulatory approval from the Bulgarian National Bank (BNB) and the Financial Supervision Commission of the Republic of Bulgaria (FSC), authorisation by the National Bank of Belgium (NBB), the European Central Bank (ECB) and anti-trust clearance.

Closing is expected during the second quarter of 2017 at the latest.

In December, it was reported that Hungary’s largest lender OTP Bank had also made an offer to buy UBB.

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