Romania is becoming a significant deal hotspot for Western Europe’s financial industry, with Italy’s largest banks, UniCredit SpA and Intesa Sanpaolo SpA, expanding their presence by acquiring two lenders and market share compared to less active rivals, Societe Generale SA of France and Austria’s Raiffeisen Bank.
The growth prospects in the east are more dynamic than their cooling home markets, with third-quarter GDP data showing an economic recovery across the region. Poland posted the fastest rate of quarterly expansion in the EU, Hungary’s economy grew for the first time in five quarters, and Romania and Bulgaria also expanded. European Union investment and local consumer demand, particularly in Romania, are driving these growth prospects. UniCredit’s purchase of Alpha Bank’s unit for €300 million will make it the third-largest lender in Romania, leapfrogging Societe Generale.
Intesa is doubling its market presence by buying JC Flowers & Co.’s First Bank, both of which are pending approval by regulators. Raiffeisen is bidding for the Romanian unit of Hungary’s OTP Nyrt., with a deal potentially this year. The three transactions, totaling less than $1 billion, signal appetite for expansion in the region at a time when executives lament the lack of bank consolidation elsewhere in Europe.
Romania has experienced a notable surge in foreign investment in recent years, signaling growing confidence in its economic potential. Several factors contribute to this trend. Firstly, Romania offers a skilled and cost-effective labor force, attracting investors seeking operational efficiency.
Additionally, its strategic location within the European Union provides access to a vast market. Government initiatives, such as tax incentives and streamlined bureaucracy, enhance the country’s appeal. Industries like IT, manufacturing, and services have witnessed substantial foreign investment, fostering economic growth and job creation. Overall, Romania’s improving business climate and diverse opportunities make it an increasingly attractive destination for foreign capital.
