The Serbian privatisation agency has invited PKO BP, BA-CA, and National Bank of Greece to submit binding bids for a 99.43% stake in Vojvodjanska Banka. The bank had a market share of 5.8 % based on its total assets of EUR 459.9m on September 30, 2005, while the bank’s shareholders equity was EUR 65.7m at the same time. The bank serves some 685,000 clients via a nationwide network of 175 branches. Vojvodjanska Banka turned a profit of almost $ 1m in 2005, following a loss of $ 85m in 2004, but the general manager indicated that earnings would have been higher, were it not for heavy provisioning requirements.
Given the recent success of Romania in selling BCR and the level of interest in the bank, the Serbian Finance Minister has stated that he expects the price for to be higher Vojvodjanska Banka to be higher than 3.3x book value. In our view, the acquisition would best fit the strategy of BA-CA and the Unicredito Group, as it would complement their existing business in former Yugoslavia and Serbia, whilst we see little strategic value and higher implementation risk from the perspective of PKO BP. We would therefore expect a neutral trading impact on BA-CA but possibly a negative reaction for the PKO BP, on the basis of the news.