“Before entering into business with Alpha Bank, and this is a certain secret that has become almost public, we also started looking at other banks in Romania (OTP Bank-n.red). But they were not suitable for our purpose, because not every acquisition fits our strategy. The other targets we considered didn’t fit, so we gave up. We are very open to consider other opportunities in the Romanian market,” Teodora Petkova, head of UniCredit in the CEE region, said on Tuesday in Vienna.

“The merger of UniCredit-Alpha Bank Romania will lead to the creation of a larger bank than the two banks taken separately. In every merger, we will try to take advantage of all the synergies that can be identified. Soon we can start offering Alpha clients some of the investment products we have at UniCredit. We have already started preparing to offer assets under management and investment products to Alpha Bank’s Greek clients. So everything is moving,” said Petkova.

According to UniCredit Research’s latest Central and Eastern Europe (CEE) quarterly report, A Year of Decisive Elections, presented at the EEC Forum, private consumption is likely to lead to a recovery in economic growth in CEE, supported by rapid growth. real wages, increased borrowing against the backdrop of lower interest rates and a positive welfare effect from house prices. Productive investments and exports are expected to contribute to economic growth no earlier than the second half of 2024.

Economists at UniCredit forecast budget deficits below 3% of GDP in 2024-2025 only in Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic and Serbia, although fiscal policy will not support economic growth in most CEE countries. They believe that the fiscal adjustment will be slowed by the busy election schedule.

“We expect pro-European parties to win the majority of EU-CEE seats in the European Parliament, and Poland to lead a pro-European group that will support deeper economic and political integration in Europe,” wrote economists in CEE Quarterly. They add that the 2024-2025 elections will be the last before CEE politicians are forced to address demographic and economic challenges.

Among the main decisions to be made in the EEC are: 1. Adoption of the euro by Bulgaria, most likely in 2025; 2. acceleration of enlargement negotiations between the EU, the Western Balkans, Moldova and Ukraine; 3. Strengthening the geopolitical importance of Poland and Romania; 4. more support for Ukraine. Economists also identify the main potential risks in a new era marked by a populist tilt in the major parties: falling ratings, weak foreign demand that could lead to a recession, among others.

In this macroeconomic and geopolitical scenario, Central and Eastern Europe also remain growth engines for the UniCredit group. “The region retains its strategic importance for UniCredit and we plan to continue to grow at an accelerated pace, leveraging strong local teams and our global knowledge and experience,” commented Teodora Petkova, Global Head of Central and Eastern Europe at UniCredit, during the CEE Forum. Central and Eastern Europe accounts for 33% of UniCredit’s total loans, 31% of total deposits and 30% of the group’s net profit, if we take into account the financial results recorded as of September 30, 2023.

“By placing customers at the heart of our business, we offer them an unrivaled geographic footprint across 10 leading banks, including number one in Austria, Bosnia and Herzegovina and Croatia and number three in Bulgaria,” Petkova said. This makes UniCredit the second largest group in CEE by assets, worth €236 billion in Q3 2023 (also includes Alpha Bank Romania).

Petkova sees a strong trend towards the growth of digital adoption, which is why UniCredit promotes constant investments in information technology. She presented data showing that around 60% of customers in the region are already active mobile users (as of Q3 2023), up from 53% in 2022. Sales through digital channels in Central Europe almost doubled annually.

In addition to international payments, UniCredit processes more than 20% of transactions from Central and Eastern Europe, with a constant upward trend. Over 95% of all payments are initiated through digital channels.

UniCredit is the bank preferred by international companies. “Two out of three leading international clients are our clients,” said Tedora Petkova and noted that UniCredit’s competitive advantage in serving corporate clients is related to the group’s pan-European reach. “The best companies in asset management, insurance, payments, trade finance and client risk management are seamlessly connected through our integrated distribution channels, allowing us to provide services and products to all our clients at a level that perhaps no one else can.” he added. Petkova. She reminded that personalized investment opportunities through the onemarkets fund are now available to the bank’s clients in the Czech Republic, Slovakia, Hungary and Bulgaria, and Romania will soon appear.

“Along with digitalization, commitment to ESG principles is another key factor for us,” said Petkova. With EUR 2.3 billion in green loans and EUR 1.1 billion in social loans in Q3 2023 in Central and Eastern Europe, UniCredit is leading and supporting the environmental and social transition of its clients. UniCredit Foundation’s pan-European partnership with Junior Achievement and Teach for all, which also extends to Central and Eastern European countries, supports the promotion of education for children and youth in different countries. In the first nine months of 2023, approximately 45,400 received financial education at EEC, which is provided through global and local partnerships, as well as with the help of volunteers from our banks.

The merger of UniCredit-Alpha Bank came as a surprise to everyone. With a few exceptions, of course…

The announcement made at the end of October 2023 by the banking groups UniCredit Italy and Alpha Bank Greece regarding the merger of branches in Romania surprised everyone. Even the employees of the two banks did not know about the merger, internal letters came simultaneously with press releases. Only a few people at the top of both banks knew about the operation. And the head of the National Bank of Romania, Mugur Iserescu, who was informed about two weeks ago that the deal was done and that the transaction would be completed in a very short time.

UniCredit Bank Romania had (according to BNR) assets of more than 60.4 billion lei and a market share of 8.6%, while Alpha Bank Romania had assets of 21.13 billion lei and a marginal market share of more than 3%.

Orcel, UniCredit: Thanks to the merger, we have demonstrated that we are capable of reaching critical mass

UniCredit has long sought to make acquisitions, and expansion has been part of the bank’s strategy. “Monday’s announcement is a demonstration of this interest in expansion. The merger of two banks, UniCredit Romania and Alpha Bank Romania, both of which have strong anchors in the corporate and retail segments, brings an additional focus on driving growth in Romania, offering additional benefits to our client bases,” said Andrea Orcel, CEO of UniCredit Group at online meetings with media representatives and financial analysts.

For Alpha Bank, the merger means access to the other 12 markets where UniCredit operates, and for UniCredit it means access to the Greek market for UniCredit’s services and products, he added.

When asked if other takeovers of this nature were on the way, Orsel said there were no such discussions at the moment, but UniCredit was closely following developments in the banking sector and if it saw an acquisition opportunity that would add value to the Italian group, it would not hesitate to step in.

The operation is just beginning. “If I were to be conservative, I would say we don’t expect it to close before the second half of 2024. If it closes early, that’s great. But we don’t want to rush; there are many details to analyze. But I would like to reiterate the fact that the decision to merge our subsidiary in Romania is in our long-term business interests and brings maximum value to our shareholders,” Orcel said.

As you know, our goal for Romania was to maximize our value. Thanks to the merger of our subsidiary company in the country, we have shown that we are able to reach a critical size and strengthen the status of the united entity, believes the general director of the Italian banking group.

Psaltis, CEO of Alpha Services and Holdings: Our opinion about Romania has not changed: it is a fast-growing economy, it is an attractive banking market

For Alpha Bank, this transaction clearly advances our strategic goals, said Vassilios Psaltis, CEO of Alpha Services and Holdings. “The decision was made to do what we believe is best for our long-term business interests. The deal announced jointly with UniCredit is not only an extension of our strategy, but also has a much broader, long-term package. UniCredit has strong know-how, extensive experience and a large network of major divisions that will enhance the services we offer”

We are working closely on this transaction but do not want to divulge all the details. We’ll keep you updated as we get closer to closing the deal, said Psaltis, who added, “This is the best alliance we could think of and we believe it’s the best use of minimal venture capital.”

Our opinion about Romania has not changed: it is a fast-growing economy, it is an attractive banking market. The fact is that time is passing and we understand that we need to scale in order to obtain adequate profitability. The fact that UniCredit was interested in this accelerates the achievement of our goals in Romania, believes the CEO of the Greek banking group.

What Alfa Bank customers should know after the merger with UniCredit

Until the complete closure of the business (most likely in the second half of 2024, if not even in 2025, given that the approvals of the authorities (BNR, Competition Council) are still required), nothing will happen.

The concluded credit agreements remain unchanged, and the conditions do not change, sources in the banking sector told HotNews.

Once the deal is fully completed, customers will most likely receive an individual notification of a change in the organization they have signed a loan with, not necessarily a change in the terms of the loan. In other words, interest and other bank fees will most likely remain in the contract.