UniCredit and Alpha Bank want to create the third largest bank by assets in our country

Alpha Bank and UniCredit have agreed the main financial conditions for the merger between their subsidiaries in our country, an operation that will lead to the creation of the third bank in Romania in terms of assets, with a combined market share of 12%, according to yesterday's announcement of the two financial groups.

According to the agreed terms, Alpha Bank will own 9.9% of the capital of the entity resulting from the merger, the rest being owned by UniCredit, but it will remain involved including through representation at the level of the Board of Directors. Alpha Bank is expected to receive a cash consideration of 300 million euros, an amount that may undergo certain post due diligence adjustments related to the quality of the assets, the institutions also announced.

Andrea Orcel, CEO of UniCredit Group, said: "This is the first acquisition that UniCredit has made in 15 years, signaling the inherent potential that we, as a business, see in Romania and in the Central and Eastern Europe region. The opportunity offered by this merger is significant not only to our customers, current and future, but also to the employees of both institutions (...). This acquisition is a testament to UniCredit's commitment to increasing the quality and excellence of our product factories, not to mention the transformation that UniCredit has undergone over the past two years. Attracting a partner of this caliber and agreeing on a commitment like this would have been unthinkable for the old UniCredit".

According to the two financial groups, the merger will bring together two complementary entities, both UniCredit Bank Romania and Alpha Bank Romania having a solid position in the corporate and retail segments, and the operation will result in a strong financial institution that will be better positioned to serve its customers and to create new growth opportunities in the market in our country.

The transaction is expected to close next year. The operation is part of a larger transaction between the two Greek and Italian financial groups, through which UniCredit will acquire 51% of AlphaLife Insurance Company, a wholly owned life insurance subsidiary of Alpha, active in the segment of pension products and savings. UniCredit mutual funds will also be distributed through the Alpha Bank network, which serves more than 3.5 million customers in Greece.

In addition, the Italian group submitted an offer to the Hellenic Financial Stability Fund for the acquisition of the Fund's 9% holding in Alpha. If the transaction is not completed, UniCredit has committed to buy approximately 5% of Alpha from the market within a period of 24 months.

"The transaction will allow UniCredit to increase its presence in Romania, a country with high growth potential, and to expand its products and platforms in Greece, a country with strong growth prospects. Following the structural reforms of recent years, Greece has once again become a high-growth country with strong potential and represents an important hub for the UniCredit franchise in Central and Eastern Europe, through the commercial connection in this region supported by trade and tourism." it is mentioned in the UniCredit report.

Following the transaction, UniCredit forecasts an additional net profit of 100 million euros in the medium term, and Orcel expects most of this amount to come from expansion in our country, according to Reuters.

For the first six months of this year, UniCredit Romania had a consolidated net profit of 663.8 million lei, up 64%, while at the bank level the result amounted to 582.4 million lei, 71% above the one from the middle of last year. Total assets were 67.3 billion lei at the consolidated level and 60.9 billion lei at the bank level, according to the issuer's data published on the website of the Bucharest Stock Exchange (BVB), where it has two bond issues listed.

Alpha Bank Romania, which has not yet published its financial statements for the first half of this year, had total assets of 21.1 billion lei at the end of last year, while the net profit was 128.9 million lei, with 22% above that of 2021, according to the bank's report.

According to the BNR, at the end of last year, UniCredit was the seventh bank in the system by the value of assets, with a share of 8.6%, while Alpha Bank occupied the ninth position, with a share of 3%. The top was led by Banca Transilvana - 19.1%, BCR - 13.9% and BRD - 10.2%.