Romania’s privatization starts to pay off

CEC faces downsizing dilemma
Fondul Proprietatea: An anxious wait for the capital market

IN ROMANIA, bank privatization and foreign involvement go hand in hand. Société Générale’s purchase of 51% of Romanian Development Bank (BRD) in 1999 was the first milestone. After Austria’s Erste Bank bought Banca Comerciala Romania (BCR), the country’s largest bank, at 5.8 times book value, 90% of Romanian banks were in foreign hands. Only savings bank Casa de Economii si Consemnatiuni (CEC) was left on the shelf.

There has been no shortage of interest in CEC, Romania’s fifth-largest bank. The bidding process has reduced the original seven contenders to Hungary’s OTP Bank and the National Bank of Greece. The fact that Erste paid €3.7 billion for its 62% stake in BCR has highlighted the opportunities that foreign investors see in the country but has also delayed the CEC transaction since it encouraged the government to...