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Italian bank looks to expand in Hungary

The offer of Italian banking giant Sanpaolo IMI to acquire all the shares of Inter-Európa Bank Rt (IEB) is part of a strategy to strengthen the bank’s market position in Hungary, a top Sanpaolo executive told the BBJ last week.

Walter Cernoia, CEO of Sanpaolo IMI Internazionale S.p.A., a subsidiary of the main Italian bank that is in charge of the group’s Central European holdings, dismissed market rumors that the Italian bank’s bid for 100% of IEB shares in February was the first step toward ridding itself of its Hungarian asset.

“We want to show the market how strong we feel as a group behind this bank,” Cernoia said. “There is no other intention behind this acquisition.”

Sanpaolo IMI already owns 32.5% of IEB. It is now set to acquire full control of the company if most of the shareholders decide to sell their stakes at the offer price of Ft 2,000 (€8.10) per share, close to the Ft 1,956 price IEB shares closed at last Wednesday.

Cernoia said there were “very strong indications” that the Italian bank would gain full control over IEB.

The offer was made on Feb. 24 and is valid until April 15. The State Financial Institutions Supervision (PSzÁF) approved Sanpaolo’s acquisition bid in March.

IEB’s share price has doubled since last October while rumors circulate of a potential buyout. Analysts have speculated for months that a buyout would be the first step in removing the bank from the Budapest Stock Exchange Rt (BÉT), with a possible view to selling it to a bank with a major presence in Hungary. IEB currently has only a 2% market share of the local banking sector.

Zoltán Réczey, an analyst with Buda-Cash Brokerage House Rt, said there is little advantage for IEB in staying on the moribund bourse, especially if a major bank such as Sanpaolo is ready to give it a capital boost. He added that among the disadvantages of being a BÉT member are the administrative costs involved in producing regular earnings reports.

“Many companies have left the BÉT because of the costs of staying,” Réczey said. “When the share of the majority holder is really big, the company is better off continuing as a subsidiary, off the exchange.”

Cernoia said Sanpaolo would consider taking IEB off the BÉT if the group reaches the pivotal 90% control of IEB shares, which would allow it to decide alone whether to stay on the bourse or leave.

(BBJ 31.iii.03)

 
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