Romania’s privatization starts to pay off
The privatisation of Romania’s only remaining state-owned bank, savings bank Casa de Economii si Consemnatiuni (CEC) is drawing near. The bidding process has advanced so far that only Hungarian bank OTP and the National Bank of Greece remain in contention. Their offers were expected at the end of August. And while Romanian banks are looking to expand their franchise, CEC poses a different dilemma to its future owner – a possible need to downsize.
The new owner will have to decide what to do with a network of about 1,400 branches, by far Romania’s most extensive. Many of these are situated in the countryside, which is largely underdeveloped and impoverished. Yet Eugen Radulescu, CEC’s chairman and CEO, argues that remittance flows, which amount to about €4 billion to €5 billion a year, and funds that will start flooding in after EU accession, are beginning to make Romania’s rural areas a promising prospect. “Although many of our small branches that are in rural areas are not profitable, at the moment we are retaining them to cater for future growth,” says Radulescu.
Maintaining the large network is a costly exercise when many of the branches situated in small towns and villages are not generating a profit.