Bulgarian regulator clears KBC acquisition of NBG Bulgarian businesses

Written by on May 2, 2017 in Business - Comments Off on Bulgarian regulator clears KBC acquisition of NBG Bulgarian businesses

Bulgaria’s Commission for Protection of Competition (CPC) has ruled to approve the proposed deal in which Belgian-based KBC Group would acquire United Bulgarian Bank (UBB) and leasing firm Interlease from the National Bank of Greece (NBG).

The deal, announced in December 2016, is for 99.9 per cent of UBB, the fourth-largest bank in Bulgaria in terms of assets with a 7.4 per cent market share as of end-March, and 100 per cent of Interlease, the third-largest provider of leasing services in Bulgaria with a 13 per cent market share, for a total consideration of 610 million euro.

KBC is already present in the Bulgarian banking sector since 2007 through its subsidiary Cibank and also owns insurer DZI, which offers both life and non-life insurance. UBB also offers life and non-life insurance through its subsidiaries.

The combination of UBB and Cibank will result in the creation of the third-largest banking group in Bulgaria in terms of assets, with a market share of about 11 per cent. UBB and Cibank’s combined assets at the end of March stood at 10 billion leva, or about 5.1 billion euro.

The proposed merger would not distort competition in the banking sector, CPC said, as the new entity would have less than 15 per cent market share in the key retail segments analysed by the watchdog – it would hold 10.1 per cent of all deposits (fourth-largest in the segment), 14.7 per cent of mortgage loans (third-largest) and 14.3 per cent of all consumer loans (second-largest).

In terms of corporate banking, the new bank would have eight per cent market share of all deposits, making it the fourth largest in that segment, and 11.3 per cent market share of all loans, or third largest in the segment.

The largest impact will be in the life insurance segment, as the merger of DZI Life Insurance and UBB-MetLife (currently the fourth and fifth largest companies on that market) would create Bulgaria’s second-largest life insurer with 21.6 per cent market share.

This was well below the 40 per cent threshold that would have qualified the new entity as having a dominant market position and still behind the market leader, Allianz, and the proposed merger would not cause any market distortion, CPC said.

(Photo via ubb.bg)

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