Romanian banking: What a difference three years make

Kathryn Wells

May 01, 2006

Three years ago, the Romanian government had to admit defeat in its plans to privatize Banca Comerciala Romana, the country’s largest bank. By last autumn, though, when bidding was reopened, nine banks submitted bids and the bank was eventually sold at 5.8 times book value – a record at that time in central Europe. So what changed?

Kathryn Wells finds out from the government’s advisers.

Nikolae Cinteza, deputy chairman of the BCR privatisation commission

“The first that we knew of who had won was when the Erste Bank representative turned and made the victory sign. The deputy chairman of the commission then destroyed the computer’s hard drive live on TV!”
Maxim Seltzer

THE TV IMAGES were striking. On Tuesday, December 20 2005, images of a beaming Nikolae Cinteza, wielding a hammer, were broadcast to homes across Romania. Cinteza, deputy chairman of the BCR privatisation commission, was using the hammer to destroy the hard drive of the computer into which the two remaining bidders for a majority stake in the country’s largest bank, Banca Comerciala Romana – Austria’s Erste Bank and Portugal’s Millennium BCP – had secretly entered their improved bids. The decision to destroy the hard drive live in front of the gathered media was part of a push to underline the transparency of the entire bidding process – this way only the bid of the winning bank, in this case Erste, would ever be known in public.

Erste had come through a novel two-round bidding process to acquire a majority interest in BCR for €3.75