Romania was the place of perhaps the most important bank M&A deal to be announced in 2023: the merger of the local units of Italian group UniCredit and Greece’s Alpha Bank. The deal promised to allow UniCredit, as the owner of 90% of the merged entity, to supplant Societe Generale-owned BRD as the country’s third-biggest bank.

Despite the cross-border growth of Hungary’s OTP Bank and the regional potential of Romania’s Banca Transilvania, banking in central and eastern Europe is increasingly a national game.

Despite its growth into one of biggest banks in Romania, small and medium-sized enterprises remain core to the strategy of Banca Transilvania and SMEs constitute a large proportion of its lending. In 2021, its SME loan portfolio reached L19.2 billion ($4.06 billion), with L3.7 billion of new loans during the year, reaching 18,000 SMEs and micro-enterprises.

Banca Transilvania

First foreign investor for troubled sector since 2007; Bancpost acquisition boosts lender to top of domestic market.

The small and medium-sized enterprise segment has proved a tough nut for many Romanian banks to crack. Lack of transparency and what local bankers euphemistically call “tax management” by companies can make lending challenging. High levels of NPLs in the sector after the financial crisis have also put a dampener on credit supply to the sector.

Bank snaps up local advisory firm; M&A activity ‘on upward trajectory’, says CEO.

The country’s banking sector has staged a remarkable comeback over the past two years and is well-positioned to support growth and investment. Whether or not that will materialize, however, depends on its politicians.