Societe Generale withdraws from Albania

Tirana Times
By Tirana Times August 2, 2018 11:10

Societe Generale withdraws from Albania

Story Highlights

  • Societe Generale is the sole remaining French banking group operating in Albania following the sale of Credit Agricole’s Albania unit in 2015 when it was acquired by the Albanian-owned American Bank of Investments

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TIRANA, Aug. 2 – The Albania subsidiary of France’s Societe Generale has changed hands part of a deal the France-based lender has concluded to sell its Bulgarian unit to Hungary’s OTP Bank.

The takeover was initially announced by Reuters news agency before it was officially confirmed later this week by the French lender.

“Societe Generale has entered into an agreement to sell its majority stake in Societe Generale Expressbank (Bulgaria) to OTP Bank. Societe Generale has also entered into an agreement to sell its majority stake in Societe Generale Albania to the same purchaser,” France-based Societe Generale said in a statement without disclosing the amount of the transaction that it expects to have a positive impact on the Group’s financial performance.

OTP is the largest financial services provider in Hungary and one of the key players on the financial market in Central and Eastern Europe.

The closing of the transactions is expected to take place in the coming months, subject to formal receipt of clearances from the relevant banking and antitrust authorities, and relevant third parties’ consents.

Philippe Heim, Deputy Chief Executive Officer of Societe Generale Group described the sale operations in Bulgaria and Albania as “an important milestone in the implementation of Societe Generale’s Strategic and Financial plan ‘Transform to Grow,’ whose primary objectives are to focus and develop its presence on markets and activities with a critical size and the potential for generating synergies with other Group businesses.”

Citing confidential sources familiar with the process, Reuters news agency reported earlier this week that Societe Generale was expected to offload its unit in Albania to OTP as part of its strategy to dispose of units that either lack critical size or potential for synergies within the group.

 

Fifth largest bank in Albania

Societe Generale Albania is the fifth largest bank in terms of assets in Albania and the fourth largest in terms of lending. The French lender, whose 2017 Albania assets were at 81.4 billion lek (€643 mln) accounting for 5.5 percent of the total, has been present in Albania since a decade after acquiring a 75 percent stake from a local bank in 2007.

Societe Generale is the sole remaining French banking group operating in Albania following the sale of Credit Agricole’s Albania unit in 2015 when it was acquired by the Albanian-owned American Bank of Investments.

In its 2017 annual report, the Albania unit of the Societe Generale says the bank had 38 outlets and a staff of 413 at the end of 2017. The bank’s 2017 net profit dropped to 302 million lek (about €2.4 million).

 

Third bank to change hands in a year

The transaction is the third takeover in Albania’s banking system over the past year after two internal market mergers.

Albania’s banking system has already entered a consolidation stage as two small commercial banks were acquired by bigger internal competitors, reducing the number of active banks to 14 after more than a decade of 16 commercial banks.

In early 2018, the Albanian subsidiary of the National Bank of Greece was acquired by the American Bank of Investments, an American-Albanian bank that has been operating in Albania since 2016.

Back in mid-2017, Italy’s Intesa Sanpaolo Albania unit, the country’s fourth largest bank acquired the bankrupt Veneto Bank in Italy and its subsidiaries in several European countries including Albania.

Intesa Sanpaolo Bank Albania and its newly acquired loss-making Veneto Banka Albania are set to merge by the end of this year.

Several other small banks operating in the country are reportedly on sale.

 

Bank consolidation

Experts say bank consolidation, the process by which one banking company takes over or merges with another, is expected to continue and further reduce the number of banks in the country, but at the same time not affect competition in a market where the four largest banks already hold more than two-thirds of total assets, at 68 percent at the end of 2017.

Experts believe the consolidation process will lead to tougher competition and improved access to banking services at a time when credit still remains sluggish, negatively affected by both tight lending standards applied by banks and poor demand by businesses and households.

However, the restructuring and growing online banking is expected to have a negative impact on bank employees.

The 16 commercial banks operating in the country cut dozens of branches and jobs nationwide last year as lending remained sluggish and e-banking gradually expanded despite banks registering record high profits.

The country’s banking system is considered well-capitalized, liquid and profitable.

Yet, in its latest statement, the International Monetary Fund recommends that “ensuring that new market entrants have solid banking experience and meet fit and proper criteria to operate in the Albanian banking market will be critical.”

The Albanian banking system is overwhelmingly foreign owned but the market share of EU-owned banks has dropped by 15 percent to about 52 percent in the past four years as domestic owned banks expand and EU-owned banks continue deleveraging.

Turkish-owned BKT, Austria’s Raiffeisen and Albanian-owned Credins bank were the top three banks in terms of assets that include loans, investment in securities and interbank placement at the end of 2017.

 

Tirana Times
By Tirana Times August 2, 2018 11:10