Romania can go forward with the EUR 200 million capital increase of state-owned bank CEC, currently the third-largest lender by assets in the country and growing fast, after the European Commission (EC) announced on March 24 that it cleared the move.  

CEC Bank's capital would thus rise by 40% to RON 3.5 billion (EUR 750 million).

CEC has expanded quickly recently, growing from the sixth-largest lender in the country at the end of 2022 to third place (behind only Banca Transilvania and Banca Comerciala Romana BCR, part of Erste Bank Group) one year later, surpassing Raiffeisen Bank, ING Bank, and BRD-SocGen in only one year. Its assets surged by 35% in 2023 to RON 83.5 billion (EUR 17 billion) at the end of the year. 

The Commission's assessment of Romania's business plan indicated that "the capital injection would yield returns consistent with market conditions for the Romanian State, CEC Bank's sole shareholder." According to the Commission's findings, the business plan forecasts increased market share in lending and deposits, improved efficiency, and robust capital levels.

Separately, CEC Bank independently meets its MREL liabilities requirements by issuing bonds under an MTN Programme approved by the Luxembourg financial sector supervisor (CSSF). Last December, it issued at Bucharest Exchange (BVB) a 5-year senior non-preferred unsecured bonds amounting to EUR 300 million, eligible for MREL requirements, with an annual interest of 5.625%. 

The bonds, amounting to EUR 1.5 billion, were issued as part of the bank's MTN programme and have been listed with the Luxembourg Stock Exchange since November 2024.

CEC Bank has so far listed four bond issues on the Bucharest Stock Exchange, of which three bond issues took place in 2023 and one in 2024.

The Ministry of Finance, as the sole shareholder, has included the RON 1 billion capital increase at CEC Bank in its 2025 budget planning, besides a RON1.25 billion planned capital increase at Eximbank Banca Romaneasca (also state-owned).

Romania notified the European Commission in September 2024 of its intention to boost the capital of CEC Bank, with the main objectives of improving its lending capacity, developing the CEC financial group, and improving operational efficiency by streamlining workflows within the bank.

Romania has submitted to Brussels a business plan covering the period 2025-2028, along with a long-term perspective for 2029-2032 and a report on the "private investor test," all of which have been reviewed by the European Commission.

iulian@romania-insider.com

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