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First bank privatisation in Bulgaria - UBB shares bought by EBRD, Bulbank and Oppenheimer
In Bulgaria's first bank privatisation agreement signed today in Sofia, three investors, the European Bank for Reconstruction and Development (EBRD), Bulbank (formerly Bulgarian Foreign Trade Bank) and Oppenheimer & Co. Inc (for itself and its Emerging Markets funds), have bought 99.6 per cent of the state-owned United Bulgarian Bank (UBB). They have also agreed on a recapitalisation and financing package, for a total amount of up to US$ 48 million (ECU 42.7 million).
"As the pilot bank privatisation in Bulgaria, UBB will not only help stabilise the banking sector but it will also help restore public confidence in the financial sector," said Pierre Mellinger, Co-Director of the EBRD's Financial Institutions Team. "The EBRD has been working with UBB for over five years, preparing it for privatisation by providing technical assistance alongside Japan and the European Union, which is funding the Allied Irish Bank in a twinning programme."
The privatisation of UBB will be completed when the recapitalisation and financial restructuring have taken place, following agreement at the Annual Shareholders' Meeting to be held on 25 July 1997.
The Deputy Prime Minister of Bulgaria, Alexander Boshkov, said: "This investment represents an endorsement by the international community of this Government's commitment to implement far-reaching reforms and to restructure Bulgaria's financial and industrial sectors."
The injection of new capital will allow UBB to strengthen its operations, bringing it to best international banking standards. The financing will also enable it to increase medium-term lending to private sector enterprises operating in Bulgaria. Each investor will be represented on UBB's Board of Directors, to be approved at the Shareholders' Meeting.
As a state-owned commercial bank, UBB built an extensive network of 28 regional branches throughout the country, providing a full range of products and services. During the recent economic crisis, UBB was successful in maintaining a high level of customer service.
The EBRD was established in 1991 to assist the countries in central and eastern Europe and the former Soviet Union with the transition from centrally-planned to market economies. To date, the Bank is the largest single investor in the financial sector throughout the region. It has total commitments of ECU 8.6 billion.
Set up in 1964, Bulbank is Bulgaria's largest universal bank with total assets of US$ 2.4 billion and a network of 17 branches and nine offices.
Oppenheimer is a US securities firm serving corporations, institutions and private investors world-wide. The Oppenheimer Emerging Markets funds have over US$ 800 million currently under management, of which over 50 per cent is invested in eastern Europe and Russia.
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