Obscure Bulgarian investor to take over Moldova’s second-largest bank

Obscure Bulgarian investor to take over Moldova’s second-largest bank
By Iulian Ernst in Bucharest January 23, 2019

Moldova’s central bank announced on January 22 it has given preliminary permission to Doverie-United Holding of Bulgaria to take over 63.9% of the country’s second-largest bank Moldindconbank (MICB). 

The deal would, however, be a stretch for Doverie: even at the discount price asked by Moldova’s central bank for the MICB stake (€38.2mn), the deal would exceed Doverie’s total assets.

The investor was identified as “a European investor that comes with a team of experienced bankers”.

But Doverie is on its third attempt to enter Moldova’s banking market, after it failed to secure permission from the central bank in its own country to take over small Tokuda bank in 2015. 

Bulgaria’s central bank questioned the experience and the financial capacity of the investor at that time. The refusal was “based on articles of the Credit Institutions Act relating to […] the reputation and experience of the people who will manage the bank following the acquisition as well as the financial stability of the applicant with a view to the specific nature of the activity of the bank,” the Bulgarian regulator said. 

Doverie also attempted to take over stakes in two other Moldovan banks in the last few years, but it abandoned the race against Romania’s Banca Transilvania in the case of Victoriabank and failed to receive the central bank’s permission in the case of Moldova’s largest lender Agroindbank, according to Ziarul de Garda.

Doverie “claims to be one of the most important companies in Bulgaria,” Moldova’s central bank says in its statement, on a neutral note that was rather surprising given its responsibility for checking the financial soundness and experience of the investor. 

The Bulgarian investor was established in 1996 as a privatisation fund with a portfolio of holdings in more than 20 enterprises in various economic fields, operating in several countries in the region.

Doverie's corporate website shows no consolidated financial statements, while its 2017 non-consolidated statements show total assets of BGN62mn (€31mn) and losses for both 2016 and 2017. Its share capital was BGN18.7mn. The financial situation had not changed significantly as of September 2018, according to the most recent quarterly reports available.

Moldova’s central bank has been trying for some time to sell of the 64% stake in MICB which it confiscated from shareholders that operated in a coordinated way without proper disclosure. Reportedly, Veaceslav Platon (currently in jail for bank-related frauds) was behind the group of coordinated shareholders.

The central bank’s board decided on October 12 to defer for another three months the sale of the 64% stake in MICB. 

This came after a 42% stake in Agroindbank was purchased by a consortium led by the European Bank for Reconstruction and Development (EBRD), while Banca Transilvania acquired a significant stake in Victoriabank.

The International Monetary Fund (IMF) singled out MICB, which has lacked proper ownership since October 2016, in the third review of the agreements with Moldova.