Bulgaria’s First Investment Bank (FIBank) has agreed to buy smaller local lender MKB Unionbank, according to a regulatory disclosure notice submitted to the Bulgarian Stock Exchange, where FIBank’s shares and MKB Unionbank’s bonds are traded.
The financial details of the deal were not made public, but FIBank said that it would buy 100 per cent of MKB Unionbank’s stock from Hungary’s MKB Bank, itself a subsidiary of German Bayerische Landesbank (BayernLB).
In its own statement to the Bulgarian Stock Exchange, MKB Bank said that its Bulgarian unit was “a successful company on a perspective market” and the only reason to sell the subsidiary was to conform to a European Commission decision.
As part of its restructuring plan, approved by the Commission last year, BayernLB has to sell most of its foreign subsidiaries, as well as repay the state aid received in 2008 and 2009. The group has already sold its Romanian subsidiary, MKB Romexterra Bank, to a group of investors led by PineBridge Investments, the former asset management arm of AIG.
In March, reports in Bulgarian media said that FIBank was the only bank to put in a bid for MKB Unionbank, as other potential investors – including Hungary’s OTP Bank, which owns Bulgaria’s second-largest lender DSK Bank – deciding against making an offer.
FIBank reportedly offered 100 million leva to buy the smaller lender. Any deal would also have to include a cash injection of about 350 million leva to replace short-term liquidity injected by MKB Unionbank’s parent company, the reports said at the time.
The deal is subject to regulatory approval by the Bulgarian National Bank and the Commission for Protection of Competition.
FIBank is Bulgaria’s third-largest lender by assets, which will rise to 8.5 billion leva (about 4.3 billion euro) after the merger is completed, allowing the bank to close the gap to DSK Bank.