Italian banking group Intesa Sanpaolo (OTC:ISNPY) is set to significantly expand its footprint in Romania, following the announcement of its acquisition of a 99.98% stake in First Bank (NASDAQ:FRBA) from US-based JC Flowers and Company through JCF Tiger Holdings. The deal, expected to be completed in Q1 2024, will see Intesa Sanpaolo doubling its presence in the Central and Eastern Europe (CEE) region.
First Bank, which operates 40 branches and holds €1.5bn ($1.59 billion) in assets, serves small and medium enterprises (SMEs) and retail customers. The bank has also been focusing on digital technology advancements and mobile banking app development.
This move aligns with Intesa Sanpaolo's strategy for capturing value-driven opportunities and fostering organic growth, as stated by Marco Elio Rottigni, head of Intesa Sanpaolo's international subsidiary banks division. The acquisition comes on the heels of a merger between UniCredit Romania and Alpha Bank Romania, subsidiaries of UniCredit and Alpha Bank, marking the American investment fund's exit from Romania.
Intesa Sanpaolo has been present in Romania since 1996 via Intesa Sanpaolo Bank Romania, part of the International Subsidiary Banks Division (ISBD). The ISBD manages 11 commercial banks in the CEE region and Egypt, along with a wealth management firm in China, overseeing €1.5bn assets. Recently, ISBD collaborated with IBM (NYSE:IBM) to implement cutting-edge technology infrastructures for a new digital banking service.
Currently, Intesa holds €1.5 billion ($1.59 billion) in assets across 34 branches serving 60,000 customers in Romania. With this acquisition, the bank is poised to strengthen its position among the SEE Top 100 banks and enhance its services to SMEs and retail customers.
InvestingPro Insights
Drawing from InvestingPro's real-time data and expert tips, it's clear that both Intesa Sanpaolo (ISP) and First Bank (FRBA) present interesting investment scenarios.
InvestingPro Tips highlights that ISP boasts high earnings quality, with free cash flow exceeding net income, and management has been aggressively buying back shares. This indicates a strong belief in the company's future performance. The bank's revenue growth has been accelerating, and it pays a significant dividend to shareholders, a bonus for income-focused investors.
On the other hand, FRBA's strong earnings should allow management to continue dividend payments, and although it suffers from weak gross profit margins, analysts predict the company will be profitable this year.
InvestingPro Data shows that as of Q2 2023, ISP had a P/E Ratio of 7.42 and a revenue growth of 20.76%. Its dividend yield stood at 6.82%, offering a good return for investors. FRBA, smaller in scale, had a P/E Ratio of 6.51 and a slightly lower revenue growth of 6.49%. Its dividend yield was 2.17%, still respectable for a bank of its size.
InvestingPro offers many more tips and data points for these companies. The insights shared here are just the tip of the iceberg, and a deeper dive into InvestingPro's resources could uncover more valuable information for investors.
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