Banca Transilvania increases capital by 95 million euros and goes to Vienna

Banca Transilvania (TLV) the only top ten private bank controlled by local investors is trying to raise 120 million RON (29 million euros) from its shareholders via a capital increase, and will also include in its share capital the non-distributed profits of the last two years, worth 174 million RON (42.4 million euros) and the capital premiums from previous increases worth 97 million RON (23.8 million euros).

As a result of the operation, which will amount to 391.5 million RON (more than 95 million euros), Banca Transilvania will have the biggest share capital of all the banks on the market, 1.47 billion RON (361 million euros).

"This is a defensive, not offensive step. The economic situation is hardly rosy and we want to be more cautious than usual," said Horia Ciorcila, chairman and founder of Banca Transilvania, who controls about 4.9% of the shares.

After two years of crisis, most local banks are trying to consolidate their capitals to be able to withstand the rising volume of non-performing loans.

Unlike banks that are backed by foreign financial groups, to which they can turn for loans, Banca Transilvania has a scattered shareholder structure and the main stream of financing comes from the profits capitalised and the money raised from investors via capital increases. Its biggest shareholder is EBRD, 14.6%, followed by Bank of Cyprus, which bought 9.5% last year.

The Cluj-based bank, the fifth biggest company on the Bucharest Stock Exchange by capitalisation is also requesting shareholders' approval for floatation on the Vienna Stock Exchange, which will improve its visibility.