French banking group Societe Generale said on August 2 that it has agreed the sale of its Bulgarian subsidiary, Societe Generale Expressbank, alongside its Albanian unit, to Hungary’s OTP Bank.
The financial details of the deal were not disclosed, but the bank said that “the two transactions are expected to have a positive impact on the group’s CET1 ratio of around 12 basis points and to reduce the group’s risk weighted assets by around three billion euro.”
Societe Generale also said that it expected to close the deals in the coming months, subject to receiving the necessary regulatory approvals.
One report by business news website Investor.bg quoted an unnamed sources saying that it was likely in the same range of 1.1 times total equity that Belgium’s KBC Group paid to buy United Bulgarian Bank last year.
With total equity of 722.5 million leva at the end of June, according to Bulgarian central bank data, that would put Societe Generale Expressbank’s sale price at about 800 million leva or about 409 million euro.
In terms of assets, Societe Generale Expressbank was Bulgaria’s seventh-largest with 6.67 billion leva at the end of June and Banka DSK, OTP Bank’s subsidiary in Bulgaria, was second with 12.49 billion leva. The merged entity would rival UniCredit Bulbank, which had assets of 18.63 billion leva, for the top position in Bulgaria’s banking system.
More importantly, the deal would expand Banka DSK’s range of services, as the deal include’s Societe Generale’s leasing, factoring and life insurance subsidiaries in Bulgaria.
The acquisition of Societe Generale Expressbank is also expected to boost the corporate portfolio of Banka DSK, which has a strong retail presence given its history as the communist-era savings bank prior to its acquisition by OTP Bank in 2003, another media report said.
(Photo: Societe Generale Expressbank)