Deutsche Bank said in talks to buy Serbia's Komercijalna

By bne IntelliNews May 3, 2012

Jacy Meyer in Prague -

Deutsche Bank has opened negotiations to purchase a 70% stake in Serbia's Komercijalna Banka, according to local media reports. The deal, which could be closed as early as this summer, appears to confirm that the Serbian banking sector is one of the few in Central and Eastern European with the potential to provoke M&A action despite the pressure on European suitors.

Deutsche's talks on the acquisition of Serbia's second largest bank - and the largest domestically owned bank - was reported by Blic on May 2. Referring to unnamed sources, the daily claims that the German giant is set to buy out both the state's 42.6% stake in Komercijalna and the European Bank for Reconstruction and Development's (EBRD) 25% interest.

Exhibiting a significant amount of detail, the report says that the remainder of the 70% stake, 2.4%, is to be sourced from minority shareholders, and adds that the EBRD will manage the sale following a capital increase from the Serb government. Belgrade has apparently allocated €102m from the budget for that purpose, in order to raise the price of the bank.

Peter Tils, CEO of Deutsche Bank's CEE unit, admitted that the bank is interested in Serbia. "The Serbian market is interesting in the first place because a large number of German companies have their businesses there," he told the paper. "In the next investment cycle, new companies from Germany are also expected to come."

As bne reported in April, with the series of M&A deals in the Polish banking sector looking to have now dried up, Serbia is one of the few remaining markets in CEE offering the growth potential to attract buyers right now.

Although many Western European banking groups might like to offload struggling local units in the region, particularly in Southeast Europe, Jovan Sikimic from Raiffeisen Research said he does not expect "any major acquisitions in SEE, even at rock bottom prices" of 0.2 to 0.3-times book value. However, he suggested that there could be some consolidation of mid-sized banks in Serbia, as it offers better growth prospects than most.

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