Ömer Tetik, BT CEO: "We are entering, as a country and a market, on the radar of new entities"

Banca Transilvania sold EUR 500 million of bonds at the end of April. More than 80% of the total issue oversubscribed in just a few hours by international investors from almost 20 countries. In this context, Ӧmer Tetik, CEO of Banca Transilvania, gave this exclusive interview to Ziarul Financiar.

Why did you choose 500 million euros?

Our initial plan started at €300 million, but during the discussions and the offer we saw significant demand at a satisfactory yield and thus saw the opportunity to increase the tranche, thus providing a better allocation to the investors in the offer. 500 million is also a standard ticket, for international markets in terms of the liquidity of an issue, which is important both during the offering and afterwards, once trading on the exchange. In short, it is the amount that provides us with significant funding and a good level of cost compared to similar issues. At this level of amount we were at an optimal point where at a standard level of amount we optimized all parameters of the offering.

What was the total interest of the investors and why did you choose €500 million?

Investor interest was high, the issue was oversubscribed in just a few hours. Total orders for this level of yield were almost €900 million, but if we had looked at a slightly higher yield, investor interest was significantly higher.

We chose this ticket level because it is standard and gives us a competitive cost and a good allocation for investors who expressed interest.

What are the market conditions like now? What do they tell us?

Investors are selective at the moment and prefer to invest in companies/banks that have very good prospects, but there is clearly an appetite for such investments. We believe that the success of the issue shows the confidence of foreign investors in BT's position and strategy as well as a high magnetism of the bank. We hope that our issuance will be a trailblazer and that we will see more international financing for our banking system, especially as we have now set a benchmark.

What is the structure of investors by country as a share of financing?

Over 80% of the total issue was subscribed by international, foreign investors from nearly 20 countries. 80 investors - investment funds, financial institutions, pension funds, commercial and central banks and insurance companies - subscribed to the offer, with the EBRD being the anchor investor with €90 million. Investors came from countries such as the UK - over 30%, the Netherlands - approx. 15%, Switzerland - approx. 12% and the USA 10%.

How much have you attracted from Romanian investors?

20% of the investment is from Romania.

Where are most of the investors who subscribed?

United Kingdom

What anchor investor do you have in this issue? How much did the EBRD subscribe?

The EBRD, which is also one of the shareholders of Banca Transilvania, was the anchor investor with €90 million.

How was that 9% yield determined and by what parameters?

As with any offering of this type, the yield is determined on the basis of consultation between the intermediaries and the issuer, as well as investor feedback (feedback which in the case of BT was also seen in the high degree of oversubscription and the speed with which the offering was oversubscribed). Initial discussions started from a higher yield of 9.5%, but given the very high investor interest, we were able to bring the yield down, while still ensuring a good allocation for interested entities. The yield is good relative to issues considered comparable, even in conditions where the market was calmer, but it still shows us the high costs with which even banks are financing themselves at the moment, all over the world.

What will you do with the money attracted?

Amounts drawn down will be treated as MREL's own funds and eligible debts. European MREL standards require banks to ensure an optimal level of MREL-eligible funds at all times, separate from customer deposits, which are guaranteed by the Bank Deposit Guarantee Fund.

The issue is part of BT's growth plan by maintaining the accelerated pace of financing the economy and Romania. The amounts attracted in the issue are assimilated to capital and these amounts have a strong multiplier effect in terms of the financing potential of the economy. Each euro attracted under the issue allows us to lend at least five times more, which is important at a time when Romania needs substantial public and private investment to close the gap with Western Europe.

Why the Dublin Stock Exchange and not the Bucharest Stock Exchange? Why Dublin?

The issue was subscribed by a large number of international investors, who are used to trading in certain markets and would have to go through additional formalities to enter new markets.

In addition, we believe that for Romania, the Romanian capital market and the BVB, this transaction means more visibility - we are entering, as a country and a market - on the radar of new entities, which will bring new investors.

Obviously, for future issues, depending on the type of investors targeted and the other specific conditions of the offers, we are also considering listing on the Bucharest Stock Exchange, especially since for us, as a financial group, the development of the Bucharest Stock Exchange and the local capital market is an immediate priority.