Best bank: Banca Transilvania
Romania was the place of perhaps the most important bank M&A deal to be announced in 2023: the merger of the local units of Italian group UniCredit and Greece’s Alpha Bank. The deal promised to allow UniCredit, as the owner of 90% of the merged entity, to supplant Societe Generale-owned BRD as the country’s third-biggest bank.
Even on a standalone basis, UniCredit’s 2023 numbers in Romania show strong financial performance and growing confidence. The Alpha Bank deal shows UniCredit’s commitment to Romania and central and eastern Europe and a degree of resolve on the part of the group leadership to take part in M&A opportunities. The merger, however, was still pending regulatory approvals and legal completion in early 2024.
For now, Romania’s Banca Transilvania retains by far the biggest position in Romania, with a net income that is about twice as much as that of either UniCredit or BRD at L3 billion ($640 million) on a consolidated basis. Only Erste-owned BCR comes close to Transilvania on that measure, but Transilvania continues to grow more rapidly than the Austrian-owned number two.
In addition to Intesa Sanpaolo’s much smaller acquisition of JC Flowers & Co-owned First Bank, the other key deal in Romania over the past 12 months was Transilvania’s purchase of the Romanian unit of Hungarian group OTP Bank, announced in early 2024. OTP’s Romanian bank is only slightly smaller than Alpha Bank Romania (both have a market share of 3%). This comes on top of a string of prior acquisitions by Transilvania.
Meanwhile, Transilvania is also growing strongly organically. Gross loans rose by 10.9% in 2023, while customer deposits grew by 15.3%. The non-performing loan ratio fell to 1.98% and the group common equity tier-1 capital ratio rose to 19.83%. With a 20% rise in net profit, Transilvania reached a return on equity of 25.5% in 2023, with a cost-to-income ratio of 45.5%.
Transilvania issued its first international bond in early 2023, followed later in the year with its first sustainable bond, both for €500 million. It has also brought its digital banking capabilities forward through a new instant payments solution and digital-banking platform for entrepreneurs, and with a card and app for children and parents, called BT Pay Kiddo.
Best investment bank: Citi
Romania had an exceptional year in equity capital markets in 2023, which was even more striking given equity issuance in the wider European market was so slow. This relied on Bucharest’s largest-ever IPO, a deal that helped put the country on the map for international investors. The IPO deal pipeline remains relatively strong. Romania is now slated for an upgrade to emerging-market status by MSCI.
Hidroelectrica’s €2 billon IPO was the key investment banking event in Romania, and perhaps for the whole of central and eastern Europe last year. It was the biggest IPO in Europe in 2023 and played a part in paving the way for a thaw in the IPO market across the continent, thanks to a strong secondary-market performance. Clearly, the firm’s status as a renewable-energy play helped, given the thirst for environmental, social and governance-compliant investments, but some credit must also go to the lead banks, especially global coordinators Citi, Erste Group, Jefferies and Morgan Stanley.
Citi’s work in Romania went far beyond Hidroelectrica. Romania also grew in regional importance in 2023 in terms of M&A deal volumes, according to Dealogic, showing its popularity as a destination for foreign direct investment. Citi, for example, advised private equity company Mid Europa on the €1.8 billion sale of food retailer Profi to Belgian supermarket chain Ahold Delhaize. It also advised Greek power company PPC on the €1.9 billion acquisition of Enel’s Romanian operations.
In debt capital markets, Citi was bookrunner on deals including Banca Transilvania’s €500 million sustainable bond debut and Erste-owned BCR’s debut green bond shortly afterwards.
These issues were followed in early 2024 with Romania’s green sovereign debut, on which Citi was bookrunner and structuring bank and for which it helped prepare during 2023. Citi’s work for the sovereign including non-syndicated issuance and a €3.25 billion dual-tranche deal in September.
Best digital bank: Raiffeisen Bank Romania
Raiffeisen Bank Romania improved its mobile application in 2023 with new capabilities, including early loan repayment and a simplified process for managing investment funds. Clients can now track investment funds managed by SAI Raiffeisen Asset Management directly through the app.
Improvements to the digital enrolment process led to a fourfold increase in new customer acquisitions with digital wallet transactions up by 36%. Customer feedback prompted the introduction of new card features, such as instant access to debit card details and the ability to adjust transaction limits.
Best bank for SMEs: Banca Transilvania
Banca Transilvania has launched new, mostly digital, services and has seen impressive growth in its loan portfolio in the small and medium-sized enterprise segment.
The bank increased its SME client base by 13% in 2023 to 25,358. SME loan balances reached more than L5.5 billion ($1.2 billion) at the group level and L4.5 billion at the bank level, growing by 17.4%.
This growth reflected the introduction of BT GO, a digital platform tailored for SME and business clients. This platform offers fully digital account opening and allows users to transfer funds between their accounts or to business partners.
Best bank for ESG: UniCredit
In 2023, UniCredit prioritized implementing a local environmental, social and governance strategy. This includes financing renewable and energy efficient sectors and meeting the strong demand for green mortgage loans.
The bank acted as joint bookrunner on the landmark Hidroelectrica IPO in July 2023. The transaction was the largest European IPO of the year and Romania’s largest equity capital markets deal to date. Hidroelectrica, an important player in hydro generation and renewable energy in Europe, generates 100% green electricity, which is crucial for Romania’s energy supply and transition.
The bank has also lent to local projects driving sustainability, innovation and digitization, and in the cultural and creative sectors through guarantee agreements with the European Investment Fund.
From April to December 2023, the bank’s staff participated in the fourth edition of the Start Major programme that involved 3,187 vocational and technical students across Bucharest and nine other counties. The initiative included four modules with 96 workshops.
Best bank for corporate responsibility: Banca Comerciala Romana
Banca Comerciala Romana’s community support efforts in 2023 were focused on financial education and inclusion.
The bank granted education loans totalling €300,000, facilitating the training of 160 people under its Study UP education finance programme.
The lender also introduced George Junior, an educational tool for children aged 7 to 14. This tool provides youngsters with an educational experience in managing finances. Besides contributing to financial literacy, this initiative fostered early brand loyalty among young customers.
Additionally, Banca Comerciala Romana launched a mobile branch initiative to promote financial inclusion among Romania’s un-banked population. This initiative targeted rural areas with fewer than 1,000 inhabitants and successfully opened accounts for around 1,000 people, while providing over 2,000 individuals with financial education.
Best bank for corporates: UniCredit
UniCredit grew its lending book by 6% in 2023 and made enhancements to its corporate banking platform BusinessNet. It is now ranked third in terms of market share for corporate banking and first in the high-end segment.
New functionalities on BusinessNet include the ability to issue and manage business debit cards entirely online and an integrated payment solution supporting over 90 currencies.
