Banca Comerciala Romana (Romanian Commercial Bank- BCR), the largest financial institution in Romania, is planning to set up its own insurance company to benefit from its huge weight in the Romanian banking system.
"The decision to set up our own insurance company was endorsed by BCR's Board over a month ago, and is to be submitted to the General Shareholders Assembly for approval.
This is when we also discussed the possibility of liquidating BCR's direct or indirect shareholdings in other insurance companies on the market," a BCR Board member told Ziarul Financiar. BCR representatives have no official comment to make on this information.
BCR already holds stakes in two insurance companies, Omniasig and Asiban (20% in each), and has lately referred fewer clients to the companies in which it holds stakes.
The bank became one of Omniasig's stockholders in 1999, when it took over Bancorex's healthy portfolio, the controlling interests (99%) in the financial service company Finarex included. It now holds one fifth in Omniasig together with Finarex.
Asiban was established back in 1997, as proposed by BCR and three other banks, Banca Transilvania, BRD (Romanian Development Bank) and CEC (the Savings Bank), and a private company, with the specific purpose of meeting the insurance demands of the founding financial institutions' clients.
BCR now has 2.2 million clients, that is a 40-50% weight in the entire banking system, and manages the accounts of 200,000 SMEs. This massive penetration in the Romanian economy could be the card up the management's sleeve when establishing an insurance company.
BCR became the largest bank in the Romanian banking system especially after taking over Bancorex, so that it is now handling more than 30% of the banking system and of the funding for the Romanian economy.
BCR last year made $114 million in net profit, while Q1, 2001 net profit reaches $38 million. Analysts say the bank is worth more than one billion dollars, considering its position on the Romanian market and the fact that it is one of the last large banks in the region which have not been privatised yet, which might stir a lot of interest.
The authorities mentioned that BCR was to be privatised in two years' time. The Government has yet to decide upon the privatisation strategy, as this is to become the subject of many top-level economic and political negotiations. BCR's assets at the end of 2000 amounted to 76,500bn lei.
