A SUPPLEMENT TO EUROMONEY/APRIL 1999: EASTERN EUROPE
After years of delay, bank privatization in Romania finally got underway last month with the sale of a controlling stake in the Romanian Development Bank (RDB) to France's Société Générale. And, as Euromoney went to press, the privatization of a second bank, the smaller Banc Post, was close to being finalized with GE Capital and Banco Português de Investimento both negotiating to take strategic stakes.
The deals were overshadowed by problems at Bancorex, the largest domestic bank and by a host of other problems: a foreign debt crisis is looming; the local currency the leu has been devalued sharply, local banks' credit ratings have been downgraded and economic data for 1998 have turned out worse than expected.
But the sale of the two banks is a big step forward for both the country's privatization programme and the development of the banking sector. SG has spent $200 million to acquire a 51% stake in the RDB through a direct stake and a capital increase.
RDB will also buy SG's existing local business. SG set up a local office in the early 1980s and has since become one of the most prominent international banks in Romania.