The CEC privatization, no longer a priority

The privatization of the CEC Savings Bank no longer represents an emergency for the Government, since the preliminary tenders are considered too poor l Bank sources state that they start to gain ground and there is a trend of opinion according to which it wouldn’t be bad if the state held shares in the banking system, as it happened on other markets of Central Europe l The minister of finances, Sebastian Vladescu is not delighted by the preliminary tenders and still analyzes “which one is the best option in case of the CEC”

“Seeing the indicative tenders, I am not too delighted. Today I can’t tell what’s best for the CEC. At present, the Commission analyzes which one is the best option”, Sebastian Vladescu, Minister of finances, head of the CEC Privatization Commission declared. He says that January no longer represents a firm objective for the submission of the final engaging tenders for CEC. According to the bank sources quoted, authorities consider whether it would be better to pump certain amounts of money in the bank in order to consolidate its position undermined in the past two years.

According to the document for the call of tenders for privatization sent to investors interested, the Ministry of Finances – as the representative of the state as single stockholder of the CEC – reserves the right to stop the process whenever it considers proper. Initially, the seven investors remaining in the run for taking over the CEC, were invited to submit engaging tenders by November the 28th 2005, but the deadline was delayed without a precise rescheduling, waiting for the finalization of the privatization of BCR.

After preliminary tenders were submitted on October the 21st, bank sources stated that these did not exceed 300 million Euros, although evaluations at approx. 650 million euros circulated on the market. Assets of CEC reach approximately 1,43 billion Euros, corresponding to a market quota of approximately 5% in the banking system, holding the biggest territorial network, with over 1400 units and at the end of September 2005 it registered a profit of approximately 870.000 Euros, following the loss in first part of year. The bank is in the full process of restructuring and product and services development, needing efforts for the modernization and capitalization of operations. At the same time, it may constitute an important basis for increase, especially due to the extended network in the rural areas and small towns, where other banks don’t reach. According to the previous statements of the minister of finances, privatization was to be accelerated this month, but in the meanwhile, Vladescu changed his mind.

After the privatization of BCR, the state still controls the CEC and Eximbank. The situation is not unique in Central and Eastern Europe, since there are other countries that haven’t completely privatized their bank systems yet. In Poland, the state keeps holding a majority of over 51% of the largest bank on the market – PKO Bank Polski, with a quota of over 20% of the assets of the bank system, although in November 2004, it reduced its participation in stocks through a public tender of 37,7% on the Warsaw stock exchange.

In Slovenia, no less than 19% of the assets of the bank system are still in the portfolio of the state, without perspectives for the diminution of this quota in the near future. Likewise, the Czech Republic kept two banks with majority state capital, whose cumulated market quota doesn’t exceed approximately 4%, and in Slovakia, the state holds approximately 1% of the assets of the bank system. Bulgaria concluded the privatization of the banks in 2003. In Croatia, there is the option that the state buys HVB Splitska, which UniCredit/ HVB must sell in case it reaches a concentration of 33% of the market through the fusion with a local UniCredit branch, unaccepted by the Croat authorities. (A.M.)