Bulgaria’s central bank approves FIBank acquisition of smaller local rival
The Bulgarian National Bank (BNB) said on September 19 that it has approved the proposed acquisition of MKB Unionbank by First Investment Bank (FIBank).
Last month, FIBank said that it has agreed to buy 100 per cent of MKB Unionbank’s stock from Hungary’s MKB Bank, itself a subsidiary of German Bayerische Landesbank (BayernLB). The financial details of the deal were not disclosed.
BNB deputy governor Tsvetan Gounev said that FIBank met all the criteria qualifying it to buy a Bulgarian lending institution and that the two directors it plans to appoint to the MKB Unionbank board also meet the necessary criteria and have received the required regulatory approval from the central bank.
The acquisition was the first step towards the merger of the two lenders, BNB said. “Preliminary analysis shows that this will result in positive changes to their consolidated financial situation,” the central bank said.
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, FIBank said when announcing the deal.
FIBank was the only bidder for MKB Unionbank, according to reports in Bulgarian media in March. Other potential investors – including Hungary’s OTP Bank, which owns Bulgaria’s second-largest lender DSK Bank – decided 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.
MKB Unionbank was put for sale as part of BayernLB’s restructuring plan, approved by the European Commission last year, which requires the lender 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.