According to Reuters, citing Romanian Finance Minister Sebastian Vladescu, a deadline for improved offers in the sale of CEC Bank could be delayed by around two weeks as bidders have asked for audited 1H06 results. According to Romanian daily Adevarul, Vladescu stated that the new privatization agenda will be announced this week.
Our view: Following the start of negotiations with two short-listed banks, National Bank of Greece and OTP Bank, on August 1 the ministry stated that it would complete the talks by August 23 with the deadline for improved bids set for August 31.
The final price is rumoured to come in at between EUR 500m and EUR 700m, suggesting a price of 4.5x - 6.3x. Given the level of restructuring required and the bank's limited profitability, we would expect a price towards the low end of this range. Whilst Erste Bank agreed to pay EUR 3.7bn or 5.8x historic book for a 61.9% stake in Romanian BCR, that bank had a much stronger market position and higher profitability.
The possibility of a new share issue to fund the potential acquisition of CEC has been weighing on the stock price of OTP Bank. The news today isn't expected to have an immediate trading impact, though it does suggest an extension to this period of uncertainty. We reiterate our Buy rating on the stock.