KBC acquires Bulgarian ops of Raiffeisen Bank International for EUR 1.02 bn

22 November 2021 — Andrei Victor
Belgium-based KBC Bank and Austria-based Raiffeisen Bank International ('RBI') reached an agreement for KBC to acquire 100% of the shares of Raiffeisen bank (Bulgaria) EAD, comprising RBI's Bulgarian banking operations.

The transaction also includes Raiffeisenbank Bulgaria's fully-owned subsidiaries Raiffeisen Leasing Bulgaria, Raiffeisen Asset Management (Bulgaria), Raiffeisen Insurance Broker (serving Raiffeisenbank Bulgaria's leasing and corporate clients) and Raiffeisen Service.

The deal, involving a total consideration of EUR 1,015 million paid in cash, reflects the quality of the Raiffeisen franchise and the synergies potential. Completion of the transaction is subject to regulatory approval and is expected by mid-2022.

It is the intention, after regulatory approval, to proceed with the merger of Raiffeisenbank (Bulgaria) and UBB, which will allow KBC to strengthen its position in the Bulgarian banking market. The proforma combined entity (Raiffeisenbank and UBB) would reach 18.2% market share by assets (versus 10.3% for UBB), very close to the number 1 (19.8%) and number 2 (18.4%) players. Additionally, the combined UBB-Raiffeisenbank (Bulgaria) would become the number 2 player in loans (17.0% proforma market share).

Raiffeisenbank (Bulgaria) has developed its banking business since entering the market in 1994. It is a leading universal bank in Bulgaria, offering a full range of banking, asset management, leasing and insurance brokerage services to retail, SME and corporate customers. It ranks 6th in the market with a market share of 7.9% in assets and 8.4% in loans. Raiffeisenbank (Bulgaria) operates a network of 122 bank branches across the country, complemented with an agent network of mobile banking consultants, external partners and credit intermediaries. Raiffeisenbank (Bulgaria) employs 2,500 staff servicing 635,000 customers.

The transaction also includes Raiffeisen Leasing Bulgaria, the 4th leasing company in Bulgaria (10.5% market share), Raiffeisen Asset Management (Bulgaria), the 3rd asset management company in Bulgaria (9.7% market share and 106m EUR AUM), Raiffeisen Insurance Broker (distributes products from 12 insurance companies; 1% market share) and Raiffeisen Service. These four companies are 100% owned by RBI Bulgaria.

KBC Group has been present in the Bulgarian financial sector since 2007. In 2009, KBC Group defined Bulgaria as one of its core markets. Today, KBC Group is present in Bulgaria through United Bulgarian Bank (UBB), DZI (Insurance), UBB Interlease, UBB Pension Insurance, UBB Asset Management, UBB Factoring, UBB Insurance Broker and KBC Branch Bulgaria. On 30 July 2021, KBC acquired NN's Bulgarian life insurance and pension fund activities.

UBB is part of the top 3 banks in Bulgaria in terms of assets whereas DZI retains the number one market share position in the insurance market. UBB Interlease has a leading position in Bulgaria. UBB Asset Management is the local asset management entity of the group now dominating the domestic market with over a quarter of the total assets held by Bulgarian funds.

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