The process of banking sector consolidation in Bulgaria has taken another step forward with a merger that aims to create the third largest banking institution with assets worth 3.1 billion euro.

At a news conference on November 6, in Sofia’s Grand Hotel, Anthony Hassiotis, current CEO of Postbank and DZI Bank announced the merger of Postbank and DZI Bank. The new bank is owned by Eurobank EFG Group. The new bank will have a one peer system of management with the board acting as a supervisory board.

As of November 1, the day when a court ruling approving the merger was issued, the legal name of the new institution will be Eurobank EFG Bulgaria AD. “We will continue to use the brand Postbank, probably until the middle of 2008 because we do not want to confuse our clients by eliminating it immediately,” Hassiotis said.
In 2005, Piraeus Bank bought local Eurobank to later form Piraeus Bank Bulgaria.

“We have reached an agreement with Piraeus about the name Eurobank and with the November 1 court ruling, this is not an issue for us,” he said.  

Hassiotis set a deadline for making the “new” Postbank the third largest bank in Bulgaria.

“Within three years we must do that but I think we could actually do it earlier.”

He said the new entity had planned to launch new subsidiaries on the market. Postbank already has a number of affiliates working in various fields such as Bulgarian Retail Services, two leasing companies, the EFG Factoring company and the newly formed EFG Business Services Bulgaria that will offer payroll systems and human resources services.

“We are in a process of creating the EFG Securities which will inherit the brokerage business performed by the two banks.

“We have a great desire to enter the insurance and mutual fund business and by the end of the year we will have companies set up. They will not be the result of an acquisition,” Hassiotis said. 

The merging of Postbank and DZI Bank started in late February 2007 after DZI Bank was bought by Eurobank EFG Group last December.

“In June we combined the two banks from an operational point of view, which is normally the most difficult part. This was done in a record time, not only for Bulgaria but for the world,” Hassiotis said.

The new entity has a network of a total of 264 branches and more than 3000 employees. According to Petya Dimitrova one of the board members of the new entity, this puts the new entity in third position on the market after DSK Bank (382 branches) and UniCredit Bulbank (317). In terms of mortgage loans, the new bank was second with 16.2 per cent market share after DSK Bank (24.9 per cent). “We are fourth regarding housing loans with 11.9 per cent market share,” Dimitrova said. First was DSK Bank (31 per cent), followed by United Bulgarian Bank (UBB) (17.9 per cent) and UniCredit Bulbank (13.3 per cent). “As for deposits we are fifth with 8.9 per cent market share with UniCredit Bulbank first (16.6 per cent), DSK Bank second (13.5 per cent),  Raiffeisenbank Bulgaria (9.2 per cent), and UBB (9.2 per cent). Currently this puts us among the top five banking institutions in the country,” she said.

The merger of Postbank and DZI Bank is the second on such a scale in Bulgaria, after this April saw the completion of the merger of Bulbank with HVB Bank Biochim and Hebros Bank, both units of German HVB Group that was acquired by UniCredit. The new UniCredit Bulbank, is the market leader with 20 per cent market share and total assets of 4.2 billion euro.

Postbank was acquired by the Greek based EFG Eurobank-Ergasias in 2004. The later paid an undisclosed sum for a 96.74 per cent stake in Postbank.
In January 2005, the lender launched a leasing company EFG Leasing, which offers financial leasing for industrial, transport, commercial, construction and other equipment.

In March 2005, Postbank set up a motor vehicle leasing firm, EFG Auto Leasing, which offers financial and operational leasing schemes for all types of vehicles, as well as sub-leasing for corporate and individual clients. In August 2006, Postbank placed a 17.3 million euro bond issue to optimise the price of the bank’s raised capital.
The bank’s assets totalled 1.468 billion euro at the end of 2006.  Sharesholders  include EFG Eurobank Ergasias with 75.33 per cent and CEH Balkan Holdings Limited (Cyprus) with 24.33 per cent.

DZI Bank (former Roseximbank) was set up in 1998 as a successor to ailing local Trakia Bank. In 1998, Trakia Bank changed its name to Roseximbank. In 2002, the state sold of 80 per cent of the country’s largest insurer DZI to locally-registered company Contract Sofia for 21.52 million euro. Roseximbank’s late manager Emil Kyulev bought full control of Contract Sofia in August 2003 and later joined the insurer and the bank to form Bulgaria’s leading financial group DZI AD. Kyulev, considered the second richest Bulgarian was shot dead in his vehicle in broad daylight in Sofia  in 2005. In 2004, the listed lender was renamed DZI Bank. In 2005, UniCredito Italiano purchased a 24.84 per cent stake in DZI Bank via related parties.

In September 2006, EFG Eurobank signed an agreement to acquire a 74.26 vper cent stake in DZI Bank for 157.76 million euro. Last December the shares and assets of DZI Bank were frozen by a court for more than two months at the request of former shareholders in Trakia Bank, which could have threatened the merger. Later the ban was lifted.