According to unnamed sources cited on Reuters, eight banks have filed non-binding offers for Croatian Splitska Banka and are now beginning a due-diligence process. The sale is expected to be signed in 1Q06. Banks that are speculated to have filed offers are Croatian state-owned Hrvatska Postanska Banka, PKO BP, KBC, Societe Generale, OTP Bank, Banco Comercial Portugues, National Bank of Greece and GE Capital. OTP Bank's bid comes despite an earlier statement from Croatian central bank governor Rohatynski, who stated that Unicredito would not be able to sell Splitska to 'any of Croatia's five leading banks' (which would include OTP Bank) to avoid an unacceptable level of concentration in the sector. At the same time Erste Bank, Raiffeisen International and Banca Intesa all appear to have assumed they are ineligible to participate in the tender.
The press has speculated that the price for Splitska Banka could reach EUR 800m, equating to a historical P/B of 3.3x and a 2005F P/E of 23.2x (2005F net income = EUR 34.6m) Whilst the rumoured price may seem somewhat expensive, expectations in the region have grown lately, following Erste Bank's acquisition of BCR at a P/B of 5.8x, and the rise of stock market valuations throughout the region. Moreover, at least in the case of OTP Bank, some premium to stand-alone fair value could be justified by the potential for cost synergy via a combination with Nova Banka.
We continue to view the news at this stage as unlikely to have a significant trading impact. However, news that OTP Bank would be considered eligible from the central bank's standpoint could be received positively.