Intesa Sanpaolo’s Expansion in Romania after Acquiring First Bank from J.C. Flowers & Co.

On May 31, 2024, Intesa Sanpaolo, a prominent Italian banking group, announced the completion of its acquisition of First Bank S.A., a Romanian bank, from the US-based private investment fund J.C. Flowers & Co. This significant move not only doubles Intesa Sanpaolo’s presence in Romania but also strengthens its strategic foothold in the Central and Eastern Europe (CEE) region.

The acquisition involved Intesa Sanpaolo purchasing a 99.98% stake in First Bank S.A. First Bank operates 40 branches across Romania and holds assets worth approximately €1.5 billion. The bank primarily serves small and medium-sized enterprises (SMEs) and retail customers, and it has been actively investing in digital technologies and mobile banking applications.

Strategic Implications for Intesa Sanpaolo

Doubling Presence in Romania: Before the acquisition, Intesa Sanpaolo was already present in Romania through its subsidiary, Intesa Sanpaolo Bank Romania, which operates 34 branches and serves around 60,000 customers. This acquisition effectively doubles the bank’s operational capacity in Romania, enhancing its service capabilities and market reach.

Strengthening CEE Position: The move aligns with Intesa Sanpaolo’s broader strategy to strengthen its presence in the CEE region. The bank’s International Subsidiary Banks Division (ISBD) manages 11 commercial banks in the CEE region and Egypt, and this acquisition further consolidates its market position, providing a solid base for future growth and profitability in the region.

Supporting Italian Businesses Abroad: with its strong economic growth and close ties to Italy, Romania presents a lucrative market for Intesa Sanpaolo. The acquisition supports the internationalization of Italian companies, offering them better banking services and financial support in Romania.

Market and Economic Impact

Romanian Banking Sector: The acquisition of First Bank by Intesa Sanpaolo is a significant development in the Romanian banking sector. It marks the exit of J.C. Flowers & Co., a major US-based private equity firm, from the Romanian market. Given Intesa Sanpaolo’s established reputation and financial strength, this shift is expected to bring more stability and growth opportunities to the sector.

Economic Growth in Romania: Romania’s GDP growth is projected to surpass 3% over the next two years, making it one of the fastest-growing economies in the EU. Intesa Sanpaolo’s expanded operations in the country will likely contribute positively to this growth, mainly through enhanced support for SMEs and retail banking customers.

Digital Transformation

First Bank’s ongoing investments in digital technology and mobile banking are expected to complement Intesa Sanpaolo’s digital initiatives. Earlier this year, Intesa Sanpaolo signed an agreement with IBM to adopt innovative technology infrastructures, aiming to launch new digital banking services. This synergy is anticipated to accelerate digital transformation in Romania’s banking sector, providing customers with improved and more efficient banking solutions.

Intesa Sanpaolo’s acquisition of First Bank S.A. marks a significant milestone in the bank’s strategic expansion in the CEE region. Intesa Sanpaolo can leverage the country’s economic growth and strengthen its support for SMEs and retail customers by doubling its presence in Romania. The acquisition enhances the bank’s market position and underscores its commitment to capturing value-driven opportunities and fostering organic growth. As the transaction is completed in early 2024, all eyes will be on how Intesa Sanpaolo integrates First Bank’s operations and accelerates its digital transformation journey in Romania.

This strategic move is poised to benefit both the bank and its customers, driving profitability and contributing to the overall growth and stability of the Romanian banking sector.