BANCA TRANSILVANIA S.A. Romanian joint

Transcription

BANCA TRANSILVANIA S.A.
Romanian joint-stock company registered under no. J12/4155/16.12.1993
Central headquarters: Cluj-Napoca, 8 G. Baritiu Street, Romania
PROSPECTUS FOR THE OFFERING OF
50,000,000 SUBORDINATED UNSECURED
CONVERTIBLE BONDS OF 2013, DUE 2020
each with a face value of EUR 0.60
and a floating annual interest rate based on
EURIBOR 6 month + a spread set at 6.25%
convertible into shares of Banca Transilvania S.A.
Period of the Offer: 09.04.2013-08.05.2013; 09.05.2013-21.05.2013
Approved by CNVM by decision no. 304 of 04.04.2013
Lead Manager, Distribution Agent and
Paying Agent
The approval affixed to this public offering Prospectus does not represent a guarantee or
imply any other form of assessment by the National Securities Commission of the
transaction merits, advantages, disadvantages, profit or risks involved by the acceptance of
the offering. The approval decision certifies only the compliance of the Prospectus with the
law and norms adopted for the enforcement thereof.
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NOTE TO INVESTORS
This Prospectus includes information related to the offering of 50,000,000 subordinated
unsecured convertible Bonds of 2013, due 2020 in the aggregate principal amount of Euro
30,000,000 issued by Banca Transilvania S.A. and intermediated by BT Securities S.A..
The information contained in this Prospectus has been released by the Issuer or derives from
public sources, as indicated herein. The Broker conducted no independent verification, nor gave
its own interpretation to this data, and it can offer no express or implicit warranty regarding the
correctness and completeness of this information provided by the Bank; nothing contained in this
Prospectus shall be construed as the Broker’s recommendation to invest or as an educated
opinion with regard to the Issuer’s situation.
Investors are recommended to take decisions based on their own analysis of the Bank, the
banking environment in general and Romania’s situation in particular, considering the
advantages and risks highlighted in this Prospectus. The Bank’s estimates, prospects and plans
set forth in this Prospectus are given in good faith and cannot be viewed as commitments on the
part of the Issuer.
No person has been authorized to supply any information or make any representations other than
those contained in this Prospectus, and if given or made, such information or representation must
not be relied upon as having been authorized by the Bank or the Broker.
None of the information provided by the Bank regarding the Bank contained in this Prospectus
shall be construed as a representation or analysis by the Broker.
Upon review of this Prospectus, the Bank confirms that, to its knowledge, the Prospectus
discloses all material information with respect to the Bank and the Bonds, such information is
true and accurate in all material respects, all opinions, expectation and intentions of the Bank
expressed in this Prospectus are made in good faith and there is no other fact or aspect that has
not been disclosed in this Prospectus (i) that would be necessary for investors to properly
evaluate the assets, liabilities, financial status and rights deriving from the Bonds; (ii) the
omission of which would result in the statements contained in this Prospectus being misleading
in certain relevant aspects of the Bank's activity; and (iii) that, in the context of the offer, is
material and should be included in the Prospectus. In addition, the Bank confirms that the
"Prospectus Summary" included in this Prospectus accurately reflects the information included
in the Prospectus, and is not contradictory to other parts of the Prospectus. However, it is
strongly recommended that potential investors review the entire Prospectus prior to making any
investment decision.
The National Securities Commission authorized this Prospectus by decision No. 304 of
04.04.2013.
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The authorization notice affixed to this Prospectus does not represent a guarantee or other
form of assessment by the National Securities Commission of the merits, advantages or
disadvantages, profit or risks of the transactions to be performed by accepting the offering
subject matter of the approval notice; the authorization notice only certifies the compliance
of the offer with the legislation and norms adopted for the enforcement thereof.
When deciding whether to invest in the Bonds offered through this offering or not, investors
must rely on their own analyses with respect to the Bank, the terms of the offer, including the
related advantages and risks (please see the "Risk Factors" section of this Prospectus). Potential
investors must not construe the contents of the Prospectus as a recommendation to invest or as a
recommendation with respect to the legal and financial aspects.
Each Bond subscriber must be aware of and comply with all relevant laws and regulations in
force and must obtain all necessary approvals and permits in this respect. Neither the Bank nor
the Broker is responsible with respect to this matter.
This Prospectus does not constitute an offer or invitation made by the Bank or on behalf of the
Bank or the Broker to subscribe for Bonds in any jurisdiction where such offer or invitation is
not authorized or is illegal or to investors that may not legally subscribe. The persons obtaining
this Prospectus are requested to be aware of the restrictions and limitations of the offer and to
comply with such restrictions and limitations.
The Bonds will be offered in Romania through an offering that addresses only to the existing
shareholders of the Issuer, registered in the Shareholders’ Register as at the Registration Date of
21 May 2012 and Qualified Investors as defined in the Capital Market Law and the Romanian
regulations. The Bonds have not been offered or sold and will not be offered or sold directly or
indirectly to any other person in Romania and the Prospectus or any other offer material
regarding the Bonds has not been distributed or caused to its distribution and will not be
distributed or not will determine its distribution to other people in Romania, directly or
indirectly.
In some countries the distribution of this Prospectus or the offer or sale of the Bonds may be
subject to specific rules. Individuals or legal persons in possession of this Prospectus are required
to inform themselves about and to comply with any such restrictions a.
The Issuer represents to investors that the only persons responsible for the drawing the
Prospectus are the Bank and BT Securities and no other person is involved or accepts liability for
the Prospectus.
Upon the review of this Prospectus, each of the Bank, represented by Mr. Nicolae Tarcea,
Deputy CEO and BT Securities, represented by Mr. Rares Nilas, General Manager, accepts the
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liability for the contents hereof and confirms that the information supplied in this Prospectus is
true and accurate and that there are no omissions or false statements.
The Prospectus and its Annexes may be reviewed at the Broker’s headquarters (Cluj-Napoca,
Bld. 21 Decembrie 1989, nr.104, et 1) and the headquarters of the Issuer (Cluj-Napoca, G.
Baritiu Str. No.8, 2nd floor).
NOTE ABOUT FORWARD-LOOKING STATEMENTS
Some of the statements in this Prospectus constitute forward-looking statements regarding the
future prospects of Banca Transilvania. These statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, levels of activity, performance
or achievements to be materially different from any future results, levels of activity, performance
or achievements expressed or implied by these forward-looking statements. These factors
include, among other things, those listed under "Risk Factors" and elsewhere in this Prospectus.
In some cases, you can identify forward-looking statements by terminology such as "may,"
"will," "should," "could," "expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"outlook," "potential" or "continue" or the negative of such terms or other comparable
terminology.
Although we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee any future results, levels of activity, performance or
achievements. We are under no duty to update any of the forward-looking statements after the
date of this Prospectus.
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TABLE OF CONTENTS
PROSPECTUS SUMMARY........................................................................................................6
DEFINITIONS.............................................................................................................................22
I. REGISTRATION DOCUMENT............................................................................................29
1. LIABLE ENTITIES...................................................................................................................29
2. BANK’S AUDITOR..................................................................................................................29
3. SELECTED FINANCIAL INFORMATION............................................................................30
4. RISK FACTORS.......................................................................................................................38
5. INFORMATION ABOUT THE ISSUER.................................................................................49
6. OVERVIEW OF ACTIVITIES.................................................................................................51
7. THE ORGANIZATIONAL STRUCTURE...............................................................................56
8. INFORMATION ON TRENDS................................................................................................63
9. BODY OF ADMINISTRATION, MANAGEMENT AND SUPERVISORY.........................64
10. THE FUNCTIONING OF THE ADMINISTRATION AND MANAGEMENT BODIES....70
11. MAIN SHAREHOLDERS......................................................................................................77
12. FINANCIAL INFORMATION ON THE ASSETS, FINANCIAL STATEMENTS AND
REPORTS OF THE ISSUER........................................................................................................78
13. ADDITIONAL INFORMATION............................................................................................90
14. IMPORTANT AGREEMENTS..............................................................................................92
15. THIRD PARTY INFORMATION, STATEMENTS BY EXPERTS AND DECLARATIONS
OF INTEREST...............................................................................................................................92
16. DOCUMENTS ON PUBLIC DISPLAY.................................................................................93
II. BONDS TERMS AND CONDITIONS.................................................................................94
1. BASIC INFORMATION..........................................................................................................94
2. INFORMATION REGARDING SECURITIES THAT ARE TO BE OFFERED...................94
3. OFFER CONDITIONS...........................................................................................................110
4. ADMISSION TO TRADING AND TRADING METHODS.................................................120
5. ADDITIONAL INFORMATION............................................................................................121
III. ANNEXES
ANNEX 1- CONDITIONS OF THE TRANCHE A PURCHASER’S
OBLIGATIONS..........................................................................................................................122
ANNEX 2A – UNDERTAKINGS..............................................................................................126
ANNEX 2B –REPRESENTATIONS ………………………………………………………….130
ANNEX 3 - FINANCIAL STATEMENTS AND AUDITORS’ REPORTS…………………..132
ANNEX 4 – CONVERSION NOTICE FORM………………………………………………...133
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PROSPECTUS SUMMARY
This summary includes disclosure requirements known as "Elements". These Elements are
numbered as Sections AE (A.1. - E.7). The summary contains all the information required to be
included in a summary of the Bonds and the Issuer. Since it is not necessary to present some of
the Elements, there may be a lack of numbering of the Elements. Even if it is necessary to
introduce an element in this summary as of the nature of the Notes, the Issuer may not be able to
provide relevant information on each element. In this case, the summary contains a brief
description of the element and it shall have the "Not Applicable" remark to the right.
Section A: Introduction and warnings
A.1 The potential investors are warned about the fact that:
• This summary should be read as an introduction to the Prospectus;
• Any decision to invest in the securities should be based on consideration of the
Prospectus as a whole by the investor;
• Where a claim relating to the information contained in the Prospectus is brought
before a court, the plaintiff investor might, under the national legislation of the
Member States, have to bear the costs of translating the Prospectus before the
legal proceedings are initiated; and
• Civil liability attaches only to those persons who have tabled the summary
including its translation thereof, but only if the summary is misleading,
inaccurate or inconsistent when read together with the other parts of the
Prospectus or it does not provide, when read together with the other parts of the
Prospectus, key information in order to aid investors when considering whether
to invest in such securities or not.
A.2.
• Consent by the Issuer or person responsible for drawing up the Prospectus to the
use of the Prospectus for subsequent resale or final placement of securities by
financial intermediaries.
• Indication of the offer period within which subsequent resale or final placement
of securities by financial intermediaries can be made and for which consent to
use the Prospectus is given.
Not applicable
Section B: Issuer and any guarantor
B.1 The legal and commercial name of the Issuer: Banca Transilvania S.A.
B.2
• The domicile: Cluj-Napoca, 400027, Cluj County, G.Baritiu Street no.8
• The legal form: Stock company
• The legislation under which the Issuer operates: The Romanian law
• Country of incorporation: Romania
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B.4b A description of any known trends affecting the Issuer and the industries in which it
operates.
Not applicable.
B.5 If the Issuer is part of a group, a description of the group and the Issuer’s position
within the group.
In 2003, Banca Transilvania formed a financial group to offer integrated financial
services. The financial group includes the following subsidiaries: BT Securities S.A., BT
Leasing Transilvania IFN S.A., BT Investments S.R.L., BT Direct IFN S.A., BT
Building S.R.L., BT Asset Management S.A.I. S.A., BT Solution Agent de Asigurare
S.R.L., BT Asirom Agent de Asigurare S.R.L., BT Intermedieri Agent de Asigurare
S.R.L., BT Safe Agent de Asigurare S.R.L., BT Compania de Factoring S.R.L., BT
Finop Leasing S.A., BT Medical Leasing IFN S.A., Rent-a-Med S.R.L. and BT Leasing
MD S.R.L.
Banca Transilvania is part of the Banca Transilvania Group, which includes the parentBank and its subsidiaries headquartered in Romania, Republic of Moldova and Cyprus.
The main activity of the Group resides in the provision of banking and financial services
to individuals and legal entities. Such services include: account and deposit opening,
internal and external payments, forex operations, current activity financing, mediumterm financing, bank letters of guarantee, letters of credit and financial consulting to
small- and medium-sized enterprises which operate in Romania.
B.9 Where a profit forecast or estimate is made, state the figure.
Not applicable.
B.10 A description of the nature of any qualifications in the audit report on the historical
financial information
Not applicable.
B.12 Selected historical key financial information regarding the Issuer, presented for each
financial year of the period covered by the historical financial information, and any
subsequent interim financial period accompanied by comparative data from the same
period in the prior financial year except that the requirement for comparative balance
sheet information is satisfied by presenting the year-end balance sheet information.
The Group’s financial statements for the financial year ended 31 December 2011, 31
December 2010 and 31 December 2009 consist of the financial statements of Banca
Transilvania S.A. and those of its subsidiaries, which together form the Group:
Consolidated Profit and Loss Account
For the financial year ended 31 December
2011
2010
2009
Thousand Thousand Lei
Thousand
Lei
Lei
Interest income
1,856,372
1,894,260
2,109,440
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Interest expense
-921,954
-897,963
-1,355,111
Net interest income
934,418
996,297
754,329
Fee and commission income
436,026
421,645
417,098
Fee and commission expense
-53,868
-46,735
-46,293
Net fee commission income
382,158
374,910
370,805
Net income from financial
111,613
118,969
143,201
operations
Other operating income
61,524
51,719
48,316
Operating income
1,489,713
1,541,895
1,316,651
Net expense with asset provisions,
-315,849
-646,965
-490,784
other
debts
and
lending
commitments
Personnel expenses
-390,262
-373,371
-348,999
Depreciation and amortization
-63,787
-60,897
-68,042
Other operating expenses
-364,386
-306,888
-299,957
Operating expenses
-1,134,284
-1,388,121
-1,207,782
Profit/Loss from associates
0
4,741
10,298
Profit from the sale of associates
38,596
and jointly controlled companies
Profit before tax
355,429
158,515
157,763
Corporate tax expense
-58,181
-24,531
-21,048
Profit for the financial year
297,248
133,984
136,715
Profit distributable to:
The Bank’s equity holders
297,019
133,794
138,323
Profit
distributed
to
non229
190
-1,608
controlling interests
297,248
133,984
136,715
Basic earnings per share
0.1840
0.0801
0.1038
Diluted earnings per share
0.1840
0.0801
0.1038
The financial statements included in the Consolidated Profit and Loss Account, for the
financial year ended 31st December have been audited.
Consolidated statement of financial position
2011
Thousand
Lei
Assets
Cash and cash equivalents
4,550,256
Placements with banks
778,977
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2010
Thousand Lei
2009
Thousand Lei
3,701,125
1,237,155
3,186,997
1,535,915
Financial assets at fair value
through profit and loss
Loans and advances to customers
Net lease investments
Investment securities, available for
sale
Investment securities, held to
maturity
Investments in associates
Property and equipment
Intangible assets
Goodwill
Receivables related to deferred
income tax
Other assets
Total assets
Liabilities
Deposits from banks
Deposits from customers
Loans from banks and other
financial institutions
Other subordinated liabilities
Debts – securities issued
Other liabilities
Total liabilities
Equity
Share capital
Treasury shares
Share premiums
Carried forward earnings
Re-evaluation reserve
Other reserves
Total equity distributable to
equity holders of the Bank
Non-controlling interest
Total equity
Total liabilities and equity
140,551
111,977
44,865
13,977,655
207,388
5,816,778
12,215,792
223,617
3,780,997
11,481,759
271,312
2,573,466
819
820
11,654
297,531
70,555
376
28,163
287,570
48,875
8,369
30,454
42,404
305,000
12,389
8,369
16,719
139,764
26,008,813
83,501
21,730,252
122,181
19,613,030
251,181
20,257,251
2,592,982
333,194
17,279,132
1,593,295
259,134
14,989,199
2,160,404
260,148
255,384
23,616,946
257,553
0
177,114
19,640,288
253,665
1,262
111,332
17,774,996
1,860,159
-2,118
732
303,268
35,544
192,248
2,389,833
1,560,500
-256
0
301,088
28,291
198,230
2,087,853
1,176,237
-333
97,684
354,157
22,543
179,948
1,830,236
2,034
2,391,867
26,008,813
2,111
2,089,964
21,730,252
7,798
1,838,034
19,613,030
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The financial statements included in the Consolidated statement of financial position for
the financial year ended 31st December table, have been audited
The Banca Transilvania Individual Financial Statements as of Q3 2012
Individual Profit and Loss Account
For the financial Q3 2012
Q3 2012
Q3 2011
Q32012/
Thousand Lei Thousand Lei
Q3 2011 %
Interest income
1,506,577
1,341,881
1.12
Interest expense
(798,066)
(694,540)
1.15
Net interest income
708,511
647,341
1.09
358,371
322,686
1.11
(44,125)
(36,345)
1.21
Net fee commission income
314,246
286,341
1.10
Net income from financial
100,912
73,345
1.38
operations
33,867
14,761
2.29
Operating income
1,157,536
1,021,788
1.13
Personnel expenses
(313,382)
(278,044)
1.13
(35,055)
(36,927)
0.95
(268,534)
(233,369)
1.15
Operating expenses
(616,971)
(548,340)
1.13
Operating profit
540,565
473,448
1.14
Net expense with asset provisions,
(265,737)
(219,460)
1.21
other
debts
and
lending
commitments
Profit before tax
274,828
253,988
1.08
Tax expense
(9,396)
(49,472)
0.19
Net profit
265,432
204,516
1.30
The financial statements included in the Individual Profit and Loss Account for the
financial Q3 2012 table, have not been audited
Individual statement of financial position
For the financial Q3 2012
Q3 2012
Thousand Lei
Dec 31, 2011
Thousand Lei
Q3 2012/
Dec 31,
2011 %
4,558,295
4,546,532
1.00
Assets
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Loans and receivables - debt
Loans and advances to customers net
sale
maturity
1,059,394
77,593
38,734
566,608
202,819
119,521
1.87
0.38
0.32
15,526,590
14,035,290
1.11
7,171,962
5,813,219
1.23
0
819
-
74,053
69,978
1.06
Intangible assets
74,004
69,136
1.07
Tangible assets
275,174
266,586
1.03
Receivables related to deferred
16,683
26,974
0.62
income tax
Other assets
137,491
100,364
1.37
Total assets
29,009,973
25,817,846
1.12
Liabilities
Deposits from banks
265,800
251,181
1.06
22,833,173
20,280,230
1.13
2,671,711
2,468,988
1.08
276,095
260,148
1.06
Other liabilities
324,251
237,495
1.37
Total liabilities
26,371,030
237,495
1.12
Equity
Share capital
1,989,543
1,860,159
1.07
Treasury shares
-1,997
-1,907
1.05
Share premiums
0
732
369,283
234,983
1.57
Re-evaluation reserve
33,548
34,134
0.98
Other reserves
248,566
191,700
1.30
Total equity
2,638,943
2,319,804
1.14
29,009,973
25,817,846
1.12
The financial statements included in the Individual statement of financial position for the
financial Q3 2012 table, have not been audited.
A statement that there has been no material adverse change in the prospects of the
Issuer since the date of its last published audited financial statements or a description of
any material adverse change.
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Since December 31, 2011, the last audited financial situations presented in the
Prospectus there has been no material adverse changes in the prospects of Banca
Transilvania.
A description of significant changes in the financial or trading position subsequent to
the period covered by the historical financial information.
Since September 30, 2012, the last financial situations presented in the Prospectus there
has been no significant changes in the financial or trading position of Banca
Transilvania.
B.13 A description of any recent events particular to the Issuer which are to a material extent
relevant to the evaluation of the Issuer’s solvency.
For prudential purposes, the IFRS provisioning methodology and Profit and Loss
Account for H1 2012 have been audited.
Banca Transilvania’s capital adequacy ratio, including the audited profit for H1 2012
continues to be at a comfortable level of 11.27%.
B.14 If the Issuer is part of a group, a description of the group and the Issuer’s position
within the group.
In 2003, Banca Transilvania formed a financial group to offer integrated financial
services. The financial group includes the following subsidiaries: BT Securities S.A., BT
Leasing Transilvania IFN S.A., BT Investments S.R.L., BT Direct IFN S.A., BT
Building S.R.L., BT Asset Management S.A.I. S.A., BT Solution Agent de Asigurare
S.R.L., BT Asirom Agent de Asigurare S.R.L., BT Intermedieri Agent de Asigurare
S.R.L., BT Safe Agent de Asigurare S.R.L., BT Compania de Factoring S.R.L., BT
Finop Leasing S.A., BT Medical Leasing IFN S.A., Rent-a-Med S.R.L. and BT Leasing
MD S.R.L.
Banca Transilvania is part of the Banca Transilvania Group, which includes the parentBank and its subsidiaries headquartered in Romania, Republic of Moldova and Cyprus.
If the Issuer is dependent upon other entities within the group, this must be clearly
stated.
Not applicable.
B.15 A description of the Issuer’s principal activities.
The Bank's main business activity consists of offering banking products and services
such as current accounts, cash operations, deposits, loans, discount operations and
trading bills acceptance, placements, subscriptions, management of securities portfolios,
banking consultancy, negotiation of insurance/reinsurance contracts with insurance
companies, settlement of securities and deposit and custody operations for collective
placement bodies. In accordance with Article 6 in the Articles of Association, the
business activity of the Bank is "NACE 6419 - Other monetary intermediation
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activities".
B.16 To the extent known to the Issuer, state whether the Issuer is directly or indirectly owned
or controlled and by whom and describe the nature of such control.
The only shareholders holding more than 5% of the Bank’s Shares are the EBRD, which
holds 278,100,206 Shares representing 14.6134% of the Bank’s Shares, BANK OF
CYPRUS PUBLIC COMPANY LIMITED which holds 98,851,113 Shares representing
5.194373% of the Bank’s Shares and SIF Moldova which holds 95,169,081 Shares
representing 5.0008% of the Bank’s Shares.
The EBRD is an international organization owned by its member/shareholder countries,
the European Community and the European Investment Bank.
B.17 Credit ratings assigned to the Issuer or its debt securities at the request or with the
cooperation of the Issuer in the rating process.
Banca Transilvania has been rated by Fitch Ratings Agency since 2009 and the rating
awarded in 2009, was confirmed by Fitch Ratings in 2010 and 2011, so at this moment
the Bank ratings at Long-term foreign currency Issuer Default (IDR) is “BB-”, shortterm foreign currency IDR is “B” and Individual is “D”, Support is “3” and Support
Rating Floor is “BB-”. The Outlook for the Long-term foreign currency IDR is Stable.
Section C: Securities
C.1 A description of the type and the class of the securities being offered and/or admitted to
trading, including any security identification number.
Subordinated unsecured convertible Bonds of 2013, due 2020 to be issued pursuant to
this Prospectus, which will be in nominative, dematerialized form, registered in the
Bond Registry kept with the Central Depositary, with a nominal value of Euro0.6 each
and a total nominal value of up to Euro30,000,000.
C.2 Currency of the securities issue.
Euro
C.5 A description of any restrictions on the free transferability of the securities.
There are no restrictions on the free transferability of the securities.
C.8 A description of the rights attached to the securities.
• Including ranking
• Including limitations to those rights
Status, Subordination
The Bonds are direct, unconditional, general and unsecured obligations of the Bank
ranking pari passu among themselves and without any preference, but the Bonds shall be
subordinated and junior in right of payment to the non-subordinated claims of all other
creditors, but shall rank pari passu with any subordinated debts of the Issuer, ; provided
that, such subordination provisions shall not prevent any holder of the Bonds from
exercising the conversion rights under the Bonds set forth in the Prospectus, and no
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deemed payment of any Bond arising out of any exercise of conversion rights shall be
prohibited by such subordination provisions.
In the event of bankruptcy or liquidation of the Bank, all amounts due under the Bonds
shall be subordinated to the prior payment and satisfaction in full of all unsubordinated
indebtedness of the Bank admitted in such procedure. The subordination provisions
shall be pursuant to the requirements set forth by the NBR to qualify the Bonds as
supplementary Tier II Capital of the Bank (own funds of the Bank), i.e. compliant with
the NBR’s Regulation 18/2006.
For as long as the Bonds are outstanding, the Bank shall not create or permit to be
created any mortgage, pledge or other lien or charge on any of its property or assets, as
security for any bonds, notes or other evidence of indebtedness heretofore or hereafter
issued, assumed or guaranteed by the Bank for money borrowed, but this undertaking of
the Bank does not represent an Event of Default pursuant to Regulation 18/2006 and
consequently cannot trigger an early repayment, acceleration or increase in the initial
costs.
Until the date of the first Business Day of the Primary Offer, the Bank will not make any
and will not allow the entry into force of any amendment to any of the Bond Agreements
that would adversely affect the interests of the Lead Investor in the bonds of Tranche A,
and will promptly notify the Lead Investor with respect to the termination or change of
any Bond Agreement, [and in reference to any replacement or substitution of the Paying
Agent], but failure to comply does not constitute a case of cross default, as defined by
Regulation 18/2006 and, consequently, cannot trigger a prepayment, acceleration or
increase in the initial costs of the Bonds.
Until the date of the Lead Investors’ subscription in the Primary Offer, in case the Lead
Investor finds any major violation or any event which proves false or incorrect any of
the representations or warranties of the Tranche A Bonds Subscription Agreement, of
the Prospectus or any of the Bond Agreements or any other documents referring to the
aforementioned, or any failure of the Bank to comply with any undertakings or
arrangements in the Tranche A Bonds Subscription Agreement, the Prospectus or any of
the Bond Agreements or any other documents referring to the aforementioned, the Lead
Investor has the right to terminate the Subscription Agreement, but this does not
constitute a case of cross default, as defined by Regulation 18/2006 and, consequently,
cannot trigger a prepayment, acceleration or increase in the initial costs of the Bonds.
Events of Default
The events of default will be limited to and will have the meaning in the definition, in
line with Regulation 18/2006.
Issuer’s undertakings
14
Subject to the provisions laid down in Annex 2A, the Issuer undertakes to observe
certain standards which will increase the performance of the Bank for the benefit of the
Bondholders and to provide certain information and documents to the Bondholders. The
breach of these undertakings does not constitute an event of default and consequently
cannot trigger the acceleration and/or early repayment of the Bonds or the increase in the
initial costs of the Bonds.
Conversion rights
Subject to the conditions set forth in Section 5. “Conversion”, within Section 2.
Information regarding securities that are to be offered, II. Bonds Terms and Conditions,
any Bondholder may choose to effect the conversion of all or any portion of the
outstanding principal of Bonds held by such Bondholder into Shares of common stock of
the Bank free and clear of any Encumbrance (as defined below) and together with all
rights attaching thereto, on each of the dates mentioned under Section 5. “Conversion”,
within Section 2. Information regarding securities that are to be offered, II. Bonds Terms
and Conditions.
Taxation: Bonds and all interests thereto are not exempt from taxation (in general).
Taxes applicable to investors in Bonds are: (i) tax on gains from transfer of Bonds; and
(ii) tax on income from interests related to Bonds. Such taxes are set according to the
resident/non-resident status of the investor.
The Bonds shall not be rated and admitted to trading on a regulated market or any other
trading platform (multilateral trading facilities etc).
C.9
• The nominal interest rate
Securities subject matter of the Offer: subordinated unsecured convertible Bonds of
2013, due 2020 issued in nominative and dematerialized form
Number of Bonds:
50,000,000 Bonds
Nominal Value:
Euro0.60
Issue price: 0.6 EURO
Estimated proceeds of the Offer: Euro30,000,000
Nominal interest rate: The Bonds bear interest from and including the Issue Date, at a
floating annual interest rate based on EURIBOR 6 month + a spread set at 6.25%.
• The date as of which the interest becomes payable and interest due dates
Interest payments: semi-annually; the interest is due and payable: on (i) January 15th and
July 15th of each year (ii) in case of conversion on the 3rd Business Day after the Shares
Issue Date immediately following the relevant Conversion Date.
Interest payment Date: Each of the following: 15 July 2013, 15 January 2014, 15 July
2014, 15 January 2015, 15 July 2015, 15 January 2016, 15 July 2016, 15 January 2017,
15 July 2017, 15 January 2018, 15 July 2018, 15 January 2019, 15 July 2019, 15 January
2020 and the Maturity Date.
15
Method of payment: principal and interest payments in respect of the Bonds will be
made on the relevant Interest Payment Date and/or Redemption Date, as applicable, by
the Paying Agent to the Bondholders registered in the Bond Registry as of the applicable
Record Date
• Where the rate is not fixed, description of the underlying grounds thereof
Floating rate determined semi-annually with reference to the EURIBOR6month plus a
"Spread" set at 6.25%
•
Maturity date and the arrangements for the amortisation of the loan, including
the repayment procedures
Maturity/Redemption: Outstanding Bonds which have not been converted into Shares
will be redeemed in their principal amount after seven years, on the date which will be
seven years after the Issue Date. The maturity will not exceed 7 years. The Bonds may
not be pre-paid or redeemed prior to the Redemption Date and Bondholders will have no
option to accelerate payment, except in an Event of Default;
• Conversion rights:
It shall be possible to convert outstanding Bonds into Shares, at the Bondholder’s option
(i) by sending a Conversion Notice in the form of Annex 4 within (30) days from a Price
Fixing Date or (ii) by sending a Conversion Notice in the form of Annex 4 within 90
days immediately following a Liquidity Event Date. For the avoidance of doubt, the
Issuer shall mention the exact Conversion Date in the notification towards Bondholders
to be sent at least 15 days before the Price Fixing Date or within five (5) days after a
Liquidity Event Date.
The Conversion shall occur at a price per Share to be determined on the applicable Price
Fixing Date or Liquidity Event Date, equal to the average between the highest and
lowest daily price of the Shares on the Spot Regular Market, weighted by the daily
trading volume on the Spot Regular Market over the 90 days on which the Shares were
traded on the BVB, immediately prior to the applicable Price Fixing Date or Liquidity
Event Date.
The conversion rights expire at the later of (i) Bond maturity or (ii) final repayment of
the Bond.
In case the conversion option is exercised, the related interest becomes due on the 3rd
Business Day after the Shares Issue Date immediately following the relevant Conversion
Date and the interest will be paid for the period between the previous Interest Payment
Date and the applicable Shares Issue Date, excluding the Shares Issue Date.
• An indication of yield
The annual gross yield at maturity is calculated based on the Issue Price
16
(assuming that there is no conversion/redemption before maturity) and
depending on the floating annual interest rate based on EURIBOR6 month +a
spread set at 6.25%.
• Name of the representative of the debt security holders
Bondholders' Meeting: Bondholders may convene in general meetings to decide matters
relating to their interests in relation to the Bonds, in accordance with the law in force.
C.10 If the security has a derivate component in the interest payment, provide a clear and
comprehensive explanation to help investors understand how the value of their
investment is affected by the value of the underlying instrument (s), especially under the
circumstances when the risks are most evident.
Not applicable.
C.11 An indication as to whether the securities offered are or will be the object of an
application for admission to trading, with a view to their distribution in a regulated
market or other equivalent markets with indication of the markets in question.
The Bonds will not be admitted to trading on the Bucharest Stock Exchange or any other
regulated market, or any other trading platform (multilateral trading facilities, etc.).
Section D: Risks
D.2 Key information on the key risks specific to the Issuer
Risks related to Romania
• Romania is an emerging market
• General - Emerging Markets
• Political and Governmental Instability in Romania
• Legislation
• Bankruptcy Laws
D.3
Risks related to the Banking Industry in Romania
• Credit risk
• Liquidity Risk
• Market Risk
• Interest Rate Risk Outside the Trading Portfolio
• Currency Risk
• Operational Risk
• Reputational Risk
• Strategic Risk
• Banking Laws
Key information on the risks specific to the securities.
Risks related to the Bank and the Bonds
• Business Environment; Dependence on the Romanian Economy
• Liquidity of the Bonds and the Shares
17
•
•
•
•
•
•
•
No Credit Rating of the Bonds
Convertible subordinated unsecured Bonds
The interest floating rate
The Bonds may not be a suitable investment for all investors.
Independent review and advice
Legal investment considerations may restrict certain investments
The Bonds subject matter of the Offer will not be evaluated and rated
Risks related to the Shares
• The market price of the Shares is volatile and could be adversely affected by the
future sale of the Shares on the open market
• A suspended trading in the Shares could adversely affect the share price
• Shares traded on the BSE are less liquid and more volatile than shares traded on
other major stock exchanges
Section E: Offer
E.2b Reasons for the offer, use of proceeds, estimated net amount of the proceeds.
Increase the Bank's supplementary Tier II Capital base (own funds of the Bank) and
finance the general operations of the Bank and the expansion of the Bank's operations,
including its branch network;
E.3 A description of the terms and conditions of the offer.
Broker:
BT Securities;
Distribution Agent: BT Securities;
Distribution undertaking:
best efforts;
Paying Agent: BT Securities;
This Offer is structured in two distinct offers:
1- The Pre-emptive Offer: This offer is addressed to all the Shareholders of the
Bank, as registered at the “Registration Date”
2- The Primary Offer is addressed primarily to the Lead Investor; if there are any
residual Bonds left after the subscription by the Lead Investor, these will be
offered to Qualified Investors.
:
Considering this distinction, this Primary Offer is divided into two tranches:
(i)
The Tranche A Bonds offer, addressed to the Lead Investor in
priority to the Tranche B Bonds offer, and is comprised of all
Bonds that remain unsubscribed to after the close of the Preemptive offer stage, and is up to 18,938,347.80 EUR.
(ii)
The Tranche B Bonds offer: This offer is addressed to Qualified
Investors and is comprised of any Bonds that remain unsubscribed
18
after the close of the Pre-emptive Offer minus the Bonds that are
subscribed by the Lead Investor in the Tranche A Bonds offer.
The Pre-emptive Offer and the Tranche B Bonds offer are
governed solely by the terms of this Prospectus, as well as the
other Bond Agreements other than the Tranche A Bonds
Subscription Agreement.
The Tranche A Bonds offer is governed by the terms of this
Prospectus as well as by the Tranche A Bonds Subscription
Agreement, the main terms of which are disclosed in this
Prospectus, including in some the of annexes hereto.
Subscription method for the Pre-emptive Offer//Exercise of pre-emptive Rights: The
Bonds will first be offered to the Shareholders registered in the Shareholder’s Register
as at Registration Date of May 21, 2012 who will be entitled, subject to the Prospectus,
to exercise pre-emptive rights to purchase Bonds up to a maximum aggregate principal
amount equal to the product of Euro 30,000,000 times a fraction, the numerator of which
is equal to the aggregate number of Shares held by such shareholder as of May 21, 2012,
and the denominator of which is equal to the aggregate number of Shares issued and
outstanding on May 21, 2012. The maximum number of the Bonds that can be purchased
by each entitled shareholder as of May 21, 2012 is equal to the previously mentioned
product divided by 0.6. No fractional Bonds shall be issued. If a fractional number of
Bonds results, the number of Bonds will be rounded as follows: if the fraction is equal
to or less than one-half, the number of Bonds will be rounded down to the next whole
Bond; and if the fraction is greater than or equal to one-half, the number of Bonds will
be rounded up to the next whole Bond.
The Pre-emptive Offer will begin on
09.04.2013 and continue for a period of thirty (30) calendar days until 08.05.2013, at the
Broker’s head offices and the CNVM authorized agencies of BT Securities between
9.00-16.00 each Business Day, except for the last day (08.05.2013), which will close at
14.00.
Subscriptions in the Primary Offer:
Tranche A Bonds offer: The Tranche A Bonds will be issued in an aggregate principal
amount of up to Euro 18,938,347.80 consisting of 31.563.913 Bonds, and are reserved
for subscription by International Finance Corporation as Lead Investor pursuant to the
Tranche A Bond Subscription Agreement.
The Issuer and the Lead Investor concluded a Tranche A Bond Subscription Agreement
under English law which documents the agreement of the Issuer to reserve the Tranche
A Bonds for the Lead Investor. The Tranche A Bond Subscription Agreement contains
certain undertakings by the Issuer detailed in the Undertakings provided in Annex 2A to
the Prospectus which mainly represent standards which will increase the performance of
19
the Bank for the benefit of the Bondholders. In accordance with the Tranche A Bonds
Subscription Agreement, the Lead Investor’s obligation to buy Bonds is subject to
certain conditions precedent, as detailed in Annex 1 to this Prospectus. Likewise, the
Lead Investor has the right to terminate the Tranche A Bonds Subscription Agreement
before its subscription within the Primary Offer, if certain events such as those detailed
in Annex 1 to this Prospectus occur. In case of termination of the Tranche A Bonds
Subscription Agreement, the purchaser of Tranche A shall not be entitled to subscribe to
the Tranche B Bonds. Furthermore, the Lead Investor is entitled to certain fees that have
been outlined in Section “Pricing” in Section 3. Offer Conditions, in II. Bonds Terms
and Conditions of this Prospectus and that concern its role as Lead Investor investing in
the reserved Tranche A Bonds.
Tranche B Bonds offer: The Tranche B Bonds will be the unsubscribed Bonds from the
Pre-emptive Offer and excluding the ones subscribed in Tranche A. Only Qualified
Investors can subscribe in this tranche
The results of the Pre-emptive Offer and the number of the Bonds object of the Primary
Offer, i.e. the number of the Bonds of Tranche A and, respectively, Tranche B will be
announced through a press release in a national newspaper on the first Business Day of
the Primary Offer.
Following the closing of the Pre-emptive Offer, the Lead Investor may subscribe for
Tranche A Bonds and Qualified Investors may subscribe for Tranche B Bonds, in the
Primary Offer respectively, beginning on the first Business Day after the closing of the
Pre-emptive Offer, from 09.05.2013 until 21.05.2013 at the broker’s head offices the
CNVM-authorized agencies of BT Securities from 9.00-16.00 each Business Day,
except for the Offering closing day, which will close at 14.00;
The Lead Investor is entitled to subscribe in the Primary Offer up to Euro 18,938,347.80
consisting of up to 31,563,913 Bonds.
The Lead Investor may exercise its right to subscribe in the Pre-emptive Offer up to its
pro rata share of its shareholding in the Issuer and during the Pre-emptive Offer Period
on the terms of this Prospectus. The Lead Investor can then subscribe up to maximum
Euro 18,938,347.80 within the Primary Offer Period, where those Tranche A Bonds
would be reserved and allocated to the Lead Investor regardless of Tranche B
subscription bids, on the terms of this Prospectus and the Tranche A Bond Subscription
Agreement.
Upon the subscription by the IFC of the Tranche A Bonds, but no later than the last day
of the Offer, 10:00 a.m. (Bucharest time), the Issuer shall send a current report to BVB
on the performance of the subscription to Tranche A Bonds.
On the last day of the Offer, if IFC has not subscribed the Tranche A Bonds, they shall
be allotted to the Tranche B Bonds. The Issuer, on the same day, by 10:00 a.m.
(Bucharest time) shall send a current report to BVB mentioning the allotment of the
20
Tranche A Bonds to Tranche B Bonds. This current report on the reallocation of the
Tranche A Bonds to Tranche B Bonds shall not and cannot be considered an amendment
to the Prospectus.
On the Allocation Date the Tranche A Bonds will be first allocated to IFC and then the
Tranche B Bonds, provided there are remaining Bonds available for this tranche, will be
allocated to Qualified Investors on pro-rata basis in the case of over-subscription
The Offer is considered successfully closed, if there are subscribed Bonds in an
aggregate amount of minimum Euro 20,000,000.
In the event that the offer is not entirely subscribed by the end of the subscription period
the Bonds which will remain unsubscribed after the closing of the Pre-emptive Offer and
Primary Offer will be annulled.
In case the Offer is not subscribed up to the successful threshold mentioned above, the
amounts subscribed will be reimbursed to the investors within 10 Business Days as of
the closing of the Offer, by banking transfer in the banking account mentioned in the
subscription form.
Offer period:
• the Pre-emptive Offer - thirty (30) calendar Days beginning on 09.04.2013 and
ending on 08.05.2013;
and
• the Primary Offer – nine (9) Business Days beginning on 09.05.2013 and ending
on 21.05.2013;
The price for the subscribed Bonds is due and payable by the investors of the subscribed
Bonds upon the subscription of the Bonds; the settlement and the registration of the title
to the subscribed Bonds will occur on the Issue Date. The first interest period begins on
the Issue Date, until July 14, 2013. .
E.4
E.7
A description of any interest that is material to the Issuer/offer including conflicting
interests.
The Broker has no interest, including any conflict of interest which can have a
significant impact on the Offer, except to fulfil the contract signed with the Issuer for
intermediation.
Estimated expenses charged to the investor by the Issuer or the offeror.
The investors will not be charged for the subscriptions, but they must consider the fact
that the issue price must be paid net of any bank fees. The investors must take into
account the applicable bank transfer fees and the required bank transfer duration.
21
22
DEFINITIONS
The following terms within this Prospectus shall have the meanings below:
"Articles of Association"
The Bank’s Articles of Association, as last amended on
November 1, 2012;
“Allocation Date ”
First Business day after the closing of the Primary Offer
"Bank or Issuer"
BANCA TRANSILVANIA S.A., headquartered in ClujNapoca,
Trade
Register
registration
no.
J12/4155/16.12.1993, having a subscribed share capital of
lei 1,903,042,413, fully paid in
"Banking Law"
Government Emergency Ordinance No. 99/2006 on credit
institutions and capital adequacy, as further amended;
"NBR "
National Bank of Romania;
"BVB"
Bucharest Stock Exchange;
"Bonds Agreements"
Collectively: (i) the Brokerage and Distribution Agreement
dated 06.03.2013 between the Bank and the Broker; (ii) the
Paying Agent Agreement dated 06.03.2013, between the
Bank and the Broker; (iii) the Tranche A Bond Subscription
Agreement; (iv) the Registrar Agreement.
"Bonds"
Subordinated unsecured convertible Bonds issued in 2013,
due 2020 pursuant to this Prospectus, which will be in
nominative, dematerialized form, registered in the Bond
Registry kept with the Central Depositary,
“Bondholder”
The owner of Bonds
"Tranch A Bond
Subscription Agreement"
The Bond Subscription Agreement
Transilvania and IFC, dated 02.04.2013;
“Bond Registry”
the Book kept with the Central Depositary in which the
Bondholders are registered.
23
between
Banca
“Lead Manager”,
"Broker" or "BT
Securities"
“Board of Directors”
BT SECURITIES S.A.
"Business Day"
A day, other than Saturday or Sunday and legal holidays, on
which commercial Banks are open for business in Romania,
London and New York; and also TARGET (Trans-European
Automated Real-Time Gross Settlement Express Transfer
System) is open for Business;
"CNVM"
National Securities Commission of Romania or any other
successor institution holding regulatory and supervisory
powers in respect of the Romanian capital market;
“Conversion Dates”
The 30th day immediately following the applicable Price
Fixing Date or the 90th day following the applicable
Liquidity Event Date, as the case may be.
The price per Share at which the conversion will be made,
according to the conversion algorithm set forth in Section 5.
Conversion in Section II. Bonds Terms and Conditions.
The irrevocable written notice in the form attached hereto as
Annex ………. which will be sent to the Broker (to be
further submitted by the Broker to the Board of Directors),
by the Bondholder in order to express its conversion right.
Law No. 297/2004 on capital market, as further amended
“Conversion Price”
“Conversion Notice”
"Capital Market Law"
The Bank’s corporate body having duties, as regulated under
the applicable Romanian laws and the Articles of
Association, irrespective of its composition at any time
"Company Law"
The Company Law No. 31/1990, as further republished and
amended;
"EBRD"
The European Bank for Reconstruction and Development;
"Eur" or "Euro"
the single, unified, lawful currency of those states
participating in the Economic and Monetary Union (also
known as the "Euro-zone")
"EURIBOR 6 months"
Interbank interest rate for Euro-denominated 6-month term
deposits, expressed in percentage points per annum. More
information about EURIBOR rates is available at
24
www.euribor.org
“EGMS”
The Extraordinary General Meeting of Shareholders
“Event of Default”
it shall be an event of default if (i) the Bank fails to pay
when due any the principal of, or interest on any Bond
owed in accordance with the Prospectus; or (ii) any
bankruptcy proceedings are initiated against the Bank or
the Bank files a petition seeking bankruptcy under any
applicable law .
"Foreign Currency
Regulation"
NBR’s Regulation No. 4/2005 regarding the foreign
currency regime as republished and further amended;
"FCY" or "Fcy"
Foreign currency;
“Group”
The Bank and its consolidated subsidiaries, at the relevant
time
The Bank’s General Meeting of Shareholders;
"GMS"
"Issue Date"
Shares Issue Date
The first Business day after the closing of the Primary
Offer, respectively 22.05.2013;
The Business day when CNVM issues the registration
certificate of Banca Transilvania share capital increase
with the Shares resulted from the converted Bonds
“Interest payment Date”
Each of the following: 15 July 2013, 15 January 2014, 15
July 2014, 15 January 2015, 15 July 2015, 15 January
2016, 15 July 2016, 15 January 2017, 15 July 2017, 15
January 2018, 15 July 2018, 15 January 2019, 15 July
2019 ,15 January 2020 and the Maturity Date
“Liquidity Event Date”
the date upon which a definitive purchase or similar
agreement is executed by a third party providing for the
acquisition of at least 15% of the share capital of the Bank
or for the control of the Bank or its business by any
means, including a merger, consolidation, share exchange,
purchase of assets, recapitalization, reorganization or
25
restructuring, liquidation, dissolution or other similar
transaction, whether in one transaction or a series of
transactions
"Lead Investor" or "IFC"
Qualified investor: International Finance Corporation;
"Lei" or “RON”
Lei (RON), the national currency of Romania;
Maturity Date
The 7-year anniversary after the Issue Date, when the
outstanding Bonds which have not been converted into
Shares will be redeemed in their principal amount.
"Offer"
The offering for the subscription of the Bonds pursuant to
the Prospectus, referring collectively to the Pre-emptive
Offer and the Primary Offer.
“Qualified investors”
any person or entity which, according to CNVM’s
regulations: (i) is included in the category of professional
clients; or (ii) is, on request, treated as professional client
or is recognized as eligible counterparty, unless it has
requested to be treated as non-professional client. For the
avoidance of any doubt, a professional client is a client
who possesses the experience, knowledge and expertise to
make its own investment decisions and properly the risks
that it incurs. In order to be considered a professional
client, the client must comply with the following criteria:
(a)
Entities which are required to be authorized or
regulated to operate in the financial markets. The
following list includes all authorized entities carrying
out the characteristic activities of the entities
mentioned: entities which are authorized in Romania
or in another Member State according to an European
directive, entities authorized or regulated in Romania
or in another Member State which does not fall under
any European directive and entities authorized or
regulated by a non-Member State:
1.
credit institutions;
2.
investment firms;
3.
other authorized or regulated financial
institutions;
4.
insurance companies;
5.
collective investment bodies and management
companies of such schemes;
6.
pension funds and management companies of
26
such funds;
7.
traders;
8. other institutional investors.
(b) legal undertakings meeting two of the following
criteria:
1. balance sheet total: EUR 20,000,000;
2. net turnover: EUR 40,000,000;
3. own funds: EUR 2,000,000
(c) national and regional governments, public bodies that
manage public debt, Central Banks, international and
supranational institutions such as the World Bank, the
International Monetary Fund, the European Central Bank,
the European Investment Bank and other similar
international organizations;
(d) other institutional investors whose main activity is to
invest in financial instruments, including natural persons
that are registered with the National Securities
Commission qualified investors
"Paying Agent"
BT Securities and, wherever the context so admits, any
substitute paying agent;
“Price-fixing Date”
Each of July 27, 2014, July 27, 2015, July 27, 2016, July
27, 2017, July 27, 2018, July 27, 2019, and the date which
is 30 days before the Maturity Date;
This Prospectus regarding the offer of the Bonds,
approved by CNVM by Decision No. 304 of 04.04.2013;
"Prospectus"
"Pre-emptive Offer"
"Pre-emptive
Offer Period"
"Primary Offer"
The Offer of the Bonds to the existing shareholders of the
Issuer, registered as at the Registration Date of 21 May
2012
The 30 calendar Days period beginning on 09.04.2013 and
ending on 08.05.2013, during which Bonds are offered to
the existing shareholders of the Issuer
The Offer of the Bonds remaining after performance of the
Pre-emptive Offer to the Tranche A Purchaser and
Tranche B - qualified investors;
27
"Primary
Offer Period"
The Period starting one Business Day after the closing day
of the Pre-emptive Offer Period and closing nine Business
days thereafter
"Reference Page"
the display of Euro-zone Interbank offered rates for
deposits in Euro designated as page EURIB0R01on
Reuters services (or such other page as may replace
EURIBOR01on Reuters services for the purpose of
displaying Euro-zone Interbank offered rates for deposits
in Euro).
“Regulation 18/2006”
The NBR Regulation regarding own funds of credit
institutions and investment firms as in force at the date of
the Prospectus
“Settlement and registration
of the subscribed Bonds”
the purchase price of subscribed Bonds will be due and
paid by investors upon subscription of the Bonds and
registration of the title to the subscribed Bonds will be
effected on the Issue Date The settlement will not be done
through the Central Depositary, as the offer will not be
using the BVB system
‘Redemption Date”
The date when the outstanding Bonds will be redeemed at
their par value on the Interest Payment Date falling on the
Maturity Date
shall be the date three (3) Business days prior to the
applicable Interest Payment Date or the Redemption Date,
as applicable
“Record Date”
“Registration Date”
May 21, 2012
“Registrar or Central
Depositary”
S.C. Depozitarul Central S.A., the institution providing
depository, registration, clearing and settlement services in
connection with transactions in securities, as well as other
operations connected therewith
“Registrar Agreement”
The contract between the Bank and the Registrar regarding
the registration of the Bonds
“Registration Date of
The first Business Day after the closing of the Primary
28
Bonds”
“Shares”
Offer, when the Broker shall prepare and transfer the Bond
Register to the Registrar
The shares issued by Banca Transilvania
“Spot Exchange Rate”
the RON/Euro exchange rate published by the BNR as
shown on Reuters applicable on the Price Fixing Date or
Liquidity Event Date
“Spot Regular Market”
the order-driven main market, where shares are traded
based on standard lots and the shares’ reference price is
determined
Shareholders’ Register.
Tranche A Bonds
Book kept with the Central Depositary, according to the
legislation in force and in which the Issuer’s shareholders
are registered.
The Tranche A Bonds issued in an aggregate principal
amount of up to Euro 18,938,347.80 consisting of up
31,563,913 Bonds, and are reserved for subscription by
International Finance Corporation as Lead Investor
pursuant to the Tranche A Bond Subscription Agreement.
Tranche B Bonds
The Tranche B Bonds will be the unsubscribed Bonds
from the Pre-emptive Offer and excluding the ones
subscribed by IFC in Tranche A Bonds. Only Qualified
Investors can subscribe in this tranche
“Trade Register”
The Trade Register Office in Cluj-Napoca
29
I. REGISTRATION DOCUMENT
1. LIABLE ENTITIES
BANCA TRANSILVANIA S.A., having its registered office in Cluj-Napoca, Str. G. Baritiu,
nr. 8, registered with the Trade Register Office of Cluj under no. J12/4155/16.12.1993, with
the Tax Identification Number 5022670, legally represented by Nicolae Tarcea – Deputy
General Manager
BT SECURITIES S.A., with the registered office in Cluj-Napoca, Str. 21 Decembrie 1989
nr.104, etaj 1, registered with the Trade Register of Cluj under no J12/3156/04.11.1994, with
the Tax Identification Number 6838953, legally represented by Mr. Rares Nilas – General
Manager
Having verified the content of this Prospectus, BANCA TRANSILVANIA S.A., legally
represented by Nicolae Tarcea – Deputy General Manager undertakes liability for the content
hereof and certifies that all information provided herein is true and free of any omissions or
misrepresentations that could materially affect the content of this document.
BT Securities SA, acting through Rareş Nilas – General Manager, certifies that all information
contained herein is, to the best of their knowledge, true and free of any omissions that could
materially affect the content of the document.
2. BANK’AUDITOR
The Bank's auditor is KPMG Audit S.R.L, having its registered office in DN1, Soseaua
Bucuresti-Ploiesti nr.69-71, Sector 1, Victoria Business Park, Bucuresti, 013685 registered
with the Trade Register Office under number J40/4439/2000, registered with the Romanian
Auditor Chamber, under no. 9/2001.
30
3.SELECTED FINANCIAL INFORMATION
3.1. Selected historical financial information
The financial information included in this Prospectus consists of excerpts from (i) the Bank's
financial statements as of December 31, 2011, December 31, 2010 and December 31, 2009,
prepared in accordance with the harmonized standards of NBR No.27/2011 and the
international accounting standards applicable to credit institutions and (ii) the management
reports as of December 31, 2011, December 31, 2010 and December 31, 2009. Attached as
Annex 3 to this Prospectus is a complete copy of the Bank's audited financial statements as of
December 31, 2011, December 31, 2010 and December 31, 2009 and the related reports of the
auditors.
The Bank has not experienced a material adverse change since the date of its last audited
financial statements, i.e. December 31, 2011.
2011
2010
2009
Thousand Lei
Thousand Thousand Lei
Lei
Interest income
1,856,372
1,894,260
2,109,440
Interest expense
-921,954
-897,963
-1,355,111
Net interest income
934,418
996,297
754,329
436,026
421,645
417,098
-53,868
-46,735
-46,293
Net fee and commission income
382,158
374,910
370,805
Net trading income
111,613
118,969
143,201
61,524
51,719
48,316
Operating income
1,489,713
1,541,895
1,316,651
Net expense with asset provisions, other
-315,849
-646,965
-490,784
debts and lending commitments
Personnel expenses
-390,262
-373,371
-348,999
-63,787
-60,897
-68,042
-364,386
-306,888
-299,957
Operating expenses
-1,134,284
-1,388,121
-1,207,782
Share of profit/loss in associates
0
4,741
10,298
Profit from the sale of associated entities
38,596
and jointly controlled companies
Profit before income tax
355,429
158,515
157,763
Income tax expense
-58,181
-24,531
-21,048
297,248
133,984
136,715
31
Distributable to:
Equity holders of the Bank
297,019
133,794
138,323
Non-controlling interests
229
190
-1,608
297,248
133,984
136,715
0.1840
0.0978
0.1038
0.1840
0.0978*
0.1038
The financial statements included in the Consolidated Profit and Loss Account for the
financial year ended 31st December have been audited.
Assets
Financial assets at fair value through
profit and loss
Investment securities, available for sale
Investment securities, held to maturity
Intangible assets
Goodwill
Receivables related to deferred income
tax
Other assets
Total assets
Liabilities
Deposits from banks
Loans from banks and other financial
institutions
Debts – securities issued
2011
Thousand Lei
2010
Thousand Lei
2009
Thousand
Lei
4,550,256
778,977
140,551
3,701,125
1,237,155
111,977
3,186,997
1,535,915
44,865
13,977,655
207,388
5,816,778
819
297,531
70,555
376
28,163
12,215,792
223,617
3,780,997
820
287,570
48,875
8,369
30,454
11,481,759
271,312
2,573,466
11,654
42,404
305,000
12,389
8,369
16,719
139,764
26,008,813
83,501
21,730,252
122,181
19,613,030
251,181
20,257,251
2,592,982
333,194
17,279,132
1,593,295
259,134
14,989,199
2,160,404
260,148
-
257,553
0
253,665
1,262
32
Other liabilities
Total liabilities
255,384
23,616,946
177,114
19,640,288
111,332
17,774,996
Equity
Share capital
1,860,159
1,560,500
1,176,237
Treasury shares
-2,118
-256
-333
Share premiums
732
0
97,684
303,268
301,088
354,157
Reevaluation reserve
35,544
28,291
22,543
Other reserves
192,248
198,230
179,948
Total equity distributable to equity
2,389,833
2,087,853
1,830,236
holders of the Bank
2,034
2,111
7,798
Total equity
2,391,867
2,089,964
1,838,034
26,008,813
21,730,252
19,613,030
The financial statements included in the Consolidated statement of financial position for the
financial year ended 31st December table, have been audited.
3.2. Presentation of the Bank’s Financial Statements
Evolution of the main financial ratios:
Thousand Lei
31 December
31
31 2011/
2010/
2011
December
December
2010
2009
2010
2009
(%)
(%)
Total Assets
26,008,813 21,730,252 19,613,030 120% 110.79%
Total Liabilities
23,616,946 19,640,288 17,774,996 120% 110.49%
Total
Shareholder’s
2,391,867
2,089,964
1,838,034 114% 113.70%
Equity
Operating income
1,489,713
1,541,895
1,316,651
97% 117.10%
Operating expense
1,134,284
1,388,121
1,207,782
82% 114.93%
Gross profit for the year
355,429
158,515
157,763 224% 100.47%
Income tax expense
58,181
24,531
21,048 237% 116.54%
Net profit for the year
297,248
133,984
136,715 222%
98%
In 2011 total assets increased by 20%, from 21,730,252 thousand lei to 26,008,813 thousand
lei, the Bank’s assets holding the greatest weight. In terms of assets, the market share of Banca
Transilvania was:
• 7.27% at the end of 2011, ranking third in NBR’s classification according to net assets;
• 6.8% at the end of 2010, ranking fifth in NBR’s classification according to net assets;
• 5.8% at the end of 2009.
The volume of credits increased moderately both in 2011 and 2010, given the slower lending
33
pace under the current market conditions, their weight in total assets at the end of 2011 being
54% (2010: 56%).
Investments in securities increased by more than 53% in 2011 as compared to the previous
year, due to the increase in liquidity levels and a lower demand for loans.
Cash and placements with Banks increased by 7.9% as compared to the preceding year,
whereas in 2010 they increased by 4.56% as compared to 2009.
Against the background of the financial crisis, tangible and intangible assets registered a slight
increase as compared to 2010, similarly to the year 2010, which showed a slight 6% increase.
As at 31 December 2011, debts amounted to lei 23,616,946, 20%higher as compared to the
previous year. This increase is mainly due to the higher volume of client resources, which
exceeded the level recorded in 2010 by 17%. In its turn, 2010 featured increases in debts of
10.49% as compared to 2009, due to client resources which were 15.27% higher than in 2009.
Borrowings from Banks and other financial institutions escalated by 63% comparatively to
2010, whereas in 2010 they decreased by 26.25% versus 2009, due to a sound liquidity of the
Bank as a result of repeated disbursements made by NBR from the minimum compulsory
reserve and of a slower lending pace.
The equity of the Group’s entities increased by 14% as compared to 2010, chiefly due to the
19% share capital increase, while in 2010 it increased by 13.70% as compared to 2009, as a
consequence of the 32.66% share capital increase.
The gross profit of the Group was 355,429 Th. Lei in 2011, on the increase by 124%
comparatively to the preceding year, exclusively due to the diminishment of credit risk. In
2010, the gross profit slightly outbalanced that of 2009, considering that 2010 continued to
pose great challenges to the global economy; the effects of the crisis, as well as the actions
taken by authorities to adjust to the new economic reality were felt within the communities.
The operational income amounted to 1,489,713 Th. Lei, slightly falling below the 2010 level,
mainly due to lower interest margins.
The net interest income fell below the 2010 level by 6%, considering that 2010 continued to
pose great challenges to the global economy; the effects of the crisis, as well as the action
taken by authorities to adjust to the new economic reality were felt within the communities.
Net fee and commission income increased by 2% versus 2010, particularly because of the
positive evolution of the operating commissions from a larger number of transactions, whereas
34
in 2010 they increased by 1% as compared to the previous year.
The commissions collected in the lending process were spread over the loan terms, whose
balance was of 95,141 Th lei as at 31 December 2011, affecting the P&L account in the
periods to come (balance in 2010: 116,969 Th. lei).
The provisions created in 2011 to cover lending, and leasing risks as well as other assets
diminished at the group’s level by 51% as compared to the previous year, negatively affecting
the P&L account with the amount of 315,849 Th lei. In 2010 provisions at group level
increased by 31.82% as compared to 2009, by adjusting risk management to the current
economic context, negatively affecting the P&L account with the amount of 649,945 Th lei.
At the end of 2011, personnel expenses amounted to 390,262 Th lei, outbalancing the previous
year’s level by 4.52%, due to the increasing number of employees, from 6,914 to 7,151.
Depreciation expenses at group level amounted to 63,787 Th lei, slightly outbalancing those of
the preceding year by 5%, whereas in 2010 depreciation expenses fell below 2009 levels by
10.5%, due to a milder investment activity.
In 2011, other operating expenses, such as tax, rents, maintenance and repairs and others,
increased by 19% as opposed to 2010, mainly due to greater contributions to the deposit
guarantee fund in the Banking system.
Profitability ratios showed a 100% escalation in 2011 comparatively to 2010, as a result of a
122% increase in the net profit; as such, the return on assets was 1.25%, while the return on
equity was 13.26%. In 2010, profitability ratios registered a slight depreciation as compared to
2009, considering the unremitting financial crisis which affected the global economy, so that
the return on assets was 0.62% and the return on equity was 6.41%.
The solvency ratio determined at Group level, under the Basel accord, recorded a value of
13.49% (14,92% at December 31, 2010), considering that the minimum limit required by the
Basel II accord is 8%.
Capital Adequacy
The table below depicts the adequacy level of the Bank’s capital as at December 31, 2011 and
December 31, 2010, according to Regulation 18/2006:
Capital Adequacy Level
OWN FUNDS LEVEL I
Million LEI
2009
2010
2011
1.734
1.943
2.075
35
Million EUR
2009
2010
410
453
2011
480
OWN FUNDS LEVEL II
Deductible Elements
Own funds - total
Capital demand - total
203
-160
1.777
1.015
154
-210
1.887
1.105
78
-214
1.939
1.307
48
-38
420
240
36
-49
440
258
18
-50
449
303
Capital demand for credit
risk coverage
849
877
985
201
205
228
Capital
demand
for
market risk coverage
46
71
132
11
17
31
Capital
demand
for
operational risk coverage
120
157
190
28
37
44
Adequacy level of own
funds BASEL 2
14% 13.66% 11.87%
The Bank must comply with the standards regarding own funds, as endorsed by NBR in 2006
and subsequently amended, based on the standards established by the International Banking
Regulations. Such regulations provide that banks should maintain an adequate level of own
funds in relation to the risk-bearing assets and off-balance sheet exposures.
The adequacy level of the Bank’s capital is determined in accordance with Regulations no.
13/2006,14/2006,19/2006,21/2006,22/2006,24/2006 (the provisions of which are compliant
with the Basel II principles) by dividing the Bank’s own funds to the capital demand for the
coverage of all risks (credit risk, market risk, operational risk).
As per the regulations, the turnover is determined by adding up the following incomes:
interest and assimilated income (from treasury and Interbank operations; from customer
operations; from bond and other fixed-income securities trading and other interests and
assimilated income);
earnings from variable-income securities;
commissions;
profit or loss on financial operations (net earnings from operations with trading and
investment securities, and exchange operations);
Other operating income (other banking and non-banking operating income).
The table below presents the turnover pertaining to the last 3 financial years (as at December
31, 2011, 2010 and 2009)
36
TURNOVER
(million lei)
2011
Interest receivable and assimilated income
1,916
Security income
2
420
Net profit/loss on financial operations
85
24
TOTAL TURNOVER
2,447
2010
1,864
4
401
127
18
2,414
2009
2,077
2
396
179
17
2,671
Employment of funds–Profit distribution
The Bank’s net profit for the financial years ended December 31, 2011, 2010 and 2009 was
distributed as follows:
(million lei)
2011
Net profit to
distribute
Development fund
Other reserve
Reserves from net
profit
2010
2009
131.87
97.49
61.94
9.34
1.97
6.75
4.30
122.53
88.77
57.63
Financial ratios
The table below presents the main financial ratios used by the Bank for the financial years
ended December 31, 2011, 2010 and 2009:
31 December
Ratio
Calculation
2011
2010
2009
Shareholders’ equity/ total
Leverage
8.32%
9.24%
9.12%
assets
Return on assets
Net profit / total assets
(ROA)
0.58%
0.49%
0.33%
Return on equity
(ROE)
Net profit / shareholder’s
equity
6.38%
Deposit Structure
37
5.31%
3.64%
The table below presents the structure of the Bank’s deposits at December 31, 2011 and 2010
(expressed in mill. lei)
Deposit
Structure
Current account
Term deposits
Total
term
deposits
from
private clients
Total deposits –
private clients
Current account
Term deposits
Total
term
deposits
from
corporate clients
Total deposits –
corporate
clients
2011
TOTAL
2010
TOTA
LEI
L
Retail deposits
LEI
Fcy
2011/2010
Fcy
TOTA
L
LEI
Fc
y
1,376
856
519
1,145
671
474
120%
128%
11
0%
11,619
6,603
5,01
6
9,700
5,433
4,26
7
120%
122%
11
8%
12,994
7,459
4,74
0
120%
122%
11
7%
1,904
1,546
358
1,815
1,518
296
105%
102%
12
1%
5,249
3,961
1,28
8
4,557
3,455
1,10
2
115%
115%
11
7%
7,153
5,507
1,64
6
6,372
4,973
1,39
9
112%
111%
11
8%
2,190
770
111%
110%
11
4%
5,53
10,845 6,105
5
Corporate deposits
Total deposits
Current account
3,279
2,402
877
2,960
Term deposits
< 3 months
11,10
4
6,324
4,78
1
9,590
5,400
4,18
9
116%
3 - 6 months
2,792
1,795
997
1,669
973
697
167%
6 - 12 months
676
523
153
673
522
151
100%
1-3 years
1,174
1,007
167
1,019
1,010
9
115%
3-5 years
1,050
881
169
1,270
958
312
83%
38
11 114
7%
%
18 143
5%
%
10 101
0%
%
10 1816
0%
%
92
54%
%
> 5 years
72
Total
term 16,86
deposits
8
DEPOSITS
- 20,14
TOTAL
7
34
10,564
12,966
38
6,30
4
7,18
1
36
25
14,257
8,888
17,217
11,07
8
11
5,36
9
6,13
9
199%
118%
117%
13
3%
11
9%
11
7%
357
%
117
%
117
%
Loan Portfolio
Loan Maturity Dates
The table below sets forth the maturity dates relative to the credit portfolio (the Bank’s gross
exposures, in lei and foreign currency) as at December 31, 2011 and 2010:
31 December
2011
2010
Loan maturity dates
(million lei)
(%)
(million lei)
(%)
In lei
< 3 months
1,845,058 21%
3 - 6 months
1,388,447 16%
6 - 12 months
2,051,609 23%
1-3 years
1,463,780 16%
3-5 years
871,436 10%
> 5 years
1,285,482 14%
8,905,812
100
%
< 3 months
462,592
9%
3 - 6 months
328,944
6%
6 - 12 months
468,162
9%
Total lei
1,483,591
1,119,278
1,829,479
1,225,168
641,668
1,317,241
7,616,425
19%
15%
24%
16%
8%
17%
100
%
In FCY
39
376,504
234,179
8%
5%
9%
419,080
1-3 years
810,462 16%
3-5 years
549,193 11%
> 5 years
2,586,726 50%
Total FCY
5,206,079
Total Loans
14,111,891
Arrears
TOTAL LOANS
100
%
779,801
491,441
2,568,487
4,869,492
12,485,916
1,246,312
878,854
15,358,204
13,364,770
40
16%
10%
53%
100
%
4. RISK FACTORS
A section entitled “Risk Factors” shall set forth the risk factors which could impair the
Issuer’s capacity to fulfil its obligations to investors arising from its securities.
Any investment in the Bonds or Shares represents risk. Before making an investment
decision, potential investors should read this Prospectus carefully. Investors should
carefully consider the risks presented below. The risks identified in this Prospectus are
believed to be important risks (but not necessarily all of the important risks) related to the
Bank, the Bonds and the Shares. Additional risks not presently known to us or that we
currently deem immaterial may also impair the Bank's operations, performance of the
Group and may lead to a decrease in the price of the Bonds or Shares.
The Bank's business, financial situation or results of operations could suffer material
adverse effects caused by any of these risks. The trading price of the Shares could also
decline due to any of these risks, and you may lose all or part of your investment.
Investors are further advised to make their best efforts to perform their own assessment of
this investment opportunity.
In this section, the order of presentation and risk factors is a random order and not a
prioritized one.
4.1.
Risks related to Romania
Romania is an emerging market
Romania is an emerging market, therefore potential investors in Bonds and Shares should
bear in mind that such a market poses a higher level of risk as compared to more developed
countries. The main country-specific downside risks in 2013 relate to the continuing
domestic political uncertainties that could increase financing costs and hold back
investment. Emergent countries, such as Romania, need an adjustment to the legislative
process, so as to ensure a stable framework fostering a balance between consumer and
investor interests. The process to this stable framework may extend over a long time span,
whereas Romania may undergo a chain of sudden and unanticipated changes at political,
legal, social or economic level, including periods of economic recession, material changes
or legislation amendments, increased inflation rates, governmental instability, austerity
measures taken by the Government or the State’s interference within the main infrastructure
areas (including, without limitation, contributions requested by the Government).
General - Emerging Markets
The Romanian economy is currently in transition to a market economy, and the Romanian
41
macro-economical environment is still unstable. Therefore, the Romanian market involves
greater risk than developed markets, including legal and political risks. Political, economic,
social and other events taking place in Romania or on other emerging markets may impact
the market value and the liquidity of the Bonds and Shares. As the development and
activities of the Bank are dependent to a large extent on the development of the Romanian
economy, such transformations may have a material adverse effect on the Bank's business,
financial status or results of operations.
Nevertheless it is worth mentioning that Romania managed to pull out of recession in the
second quarter of 2012, after two quarters of technical recessions.
Political and Governmental Instability in Romania
The political context in Romania is highly volatile, marked by the constant disputes
between executive, legislative and legal bodies, which bear a negative impact on the
business and investment environment in Romania. While the Romanian political setting
may currently seem fairly stable, the risk of instability as a result of an aggravation in
Romania’s economic situation and the degradation of life standards should be considered.
Any such instability could be greatly detrimental to the economic and political context,
especially on short-term.
.
Current credit risk ratings
On May 25, 2012, Standard & Poor's Ratings Services affirmed its 'BB+/B' long and shortterm foreign and local currency sovereign credit ratings on Romania. The outlook is stable.
The ratings on Romania are constrained by low prosperity and the economy's vulnerability
to external shocks owing to still-high, albeit declining, external debt and dominant
ownership of the banking sector by Austrian and Greek parent banks. The ratings are
supported by the country's improving fundamentals; the fiscal deficit is declining, the
current account deficit has narrowed, and the economy has started to rebalance, with the
support of an IMF program.
Moody’s government bond rating is ‘BBaa3’ since October with negative outlook, which
gives Romania a non-investment grade according to Moody’s and ‘BBB’ according to Fitch
– just one notch above junk status
Legislation
As a result of implementing the European Legislation, Romanian laws are continually
changing. Laws regulating companies, securities, competition and other areas continue to be
42
amended and new laws enacted to comply with the European Union legislation.
The new or amended laws often come into effect quickly, before the adoption of the
implementing regulations. As a result, at times, the Bank may experience difficulties in
quickly adapting its operations to comply with new regulations. Possible future changes to
the laws in force in Romania may have a materially negative impact on the Bank's business,
financial condition or results of operations and the Bonds. Laws and regulations are
sometimes applied inconsistently, and, in certain circumstances, legal remedies cannot be
obtained quickly enough.
Legal and regulatory systems necessary for an efficient operation of capital markets are still
being developed in Romania. Legal protections from market manipulation and illegal
activities are not implemented in Romania as fully and efficiently as in other more
developed jurisdictions.
Bankruptcy Laws
Romanian courts have exclusive jurisdiction in the bankruptcy procedures for a Romanian
bank. Procedures related to bank bankruptcy in Romania may last longer than in more
developed jurisdictions.
4.2.
Risks related to the Banking Industry in Romania
Credit risk
Credit risk is linked to the quality of loans granted by the Bank and to the likelihood of nonpayment. It also refers to the credit risk attached to lending products substituted off-balance
sheet, such as letters of credits and collateral. Breach of a borrower, natural or legal persons,
of its respective obligations under a binding agreement, shall have an effect on the Bank’s
earnings or capital. Risk is incumbent on any act whereby the Bank grants a loan, employs
or invests funds or is otherwise exposed through explicit or implicit contractual provisions.
Lack of proper supervision of the lending-related activities poses credit agreement-related
risks to the Bank.
The Group’s main objectives as regards credit risk management is to maintain reasonable
balance between yielding and credit risk exposure, considering the volatility of market
margins, as well as the effort to maximize profits.
Starting from the history of placements and the strategic objectives pursued in order to
avoid credit risk concentration, the Group established exposure limits/coordinates,
depending on: the business size of the economic agents, types of activity, types of loans,
types of foreign currency, credit exposure in relation to total assets, collateral structure.
The main rules established under the internal strategy are:
43
•
creation and constant maintenance of an adequate framework for credit risk
management;
• continuous improvement of loan granting/approval procedures;
• maintenance of a proper process for credit management, control and monitoring;
• Provisioning and calculation methodologies for the prudential value adjustments
related to credit risk.
The Group determines approval competencies for the territorial offices and for
Headquarters, which set the maximal thresholds for loan approvals, guarantee agreements,
surety.
Liquidity Risk
Liquidity risk refers to the current and potential risk to shareholder earnings and capital, in
the event that the Bank is unable to meet all its payment or settlement obligations in a
timely and efficient manner, when such obligations become due. The risk also includes the
lack of capacity to manage all unexpected decreases or changes in the financing resources,
or to perceive and cope with market fluctuations which may affect the Bank’s capacity to
quickly liquidate assets with the lowest possible loss of value.
The Group’s strategy on liquidity management focuses on the main issues (principles, ratio
levels, administration techniques etc.) pertaining thereto, for the purpose of obtaining the
expected returns on assets, under the conditions of an adequate and prudent liquidity
management, intelligently assumed and adjusted to the market and the group’s development
conditions, and most importantly, within the context of the current legislative framework.
Liquidity management lies on 3 components:
• the strategic component, which resides in the approval of balance sheet structures
and the annual strategy for liquidity management, setting forth optimal levels of
liquidity ratios assumed by the group for the year in progress;
• the management component, in charge with follow-up and approval of actions on
short and medium-term – weekly, monthly, quarterly;
• The operating component, which focuses on action-taking on a daily basis, within
the competency limit.
The supervision and control of the liquidity risk is based on the daily compliance with a set
of relevant liquidity indicators.
Market Risk
Market risk refers to the current and potential risk to shareholder earnings and capital, in the
event that market rates or prices undergo negative trends.
The Group’s objectives as regards market risk management aim to achieve higher returns on
44
the trading portfolio, under the circumstances of a fairly low market risk, intelligently
assumed and adjusted to the market and the group’s development conditions.
The market risk management strategy is designed according to the adjustments to the
internal and international legislative framework related to the management of such risk, as a
result of the international financial crisis. It also contemplates the Bank’s latest experiences
and those of the financial markets, in general, and the Banking market, in particular.
The Group/Bank is permanently committed to improving the current techniques, methods
and practices for market risk management.
Interest Rate Risk Outside the Trading Portfolio
Interest rate risk outside the trading portfolio refers to the current or future risk that profits
and capitals could be negatively affected following adverse changes in interest rates.
Supervision, assessment and control of interest rate risk are done by means of specific
management tool, such as the GAP analysis, static or dynamic, as well as the economic
value of assets, in accordance with the standardized methodology provided by the NBR
regulations.
Currency Risk
Currency risk refers to the current or future risk that the Group’s profit and capital could be
negatively affected, following adverse changes in interest rates between balance sheet
currencies.
The Group takes a flexible approach to the currency position management, within the limits
admitted for this indicator.
Operational Risk
Banca Transilvania’s objectives regarding operational risk management are to control
operational risk, events which may occur in the Bank’s activity, to maintain a low level of
operational risk related incidents and to ensure against such categories of risks which are
not exclusively under the group’s control.
Operational risk management is a prerequisite at all organisational levels, while the
management policies of such risks are compatible with the specificity of the business lines.
The identification, evaluation and monitoring of operational risks is a continuous process,
performed via:
•
•
permanent control (ongoing supervision of sensitive activities and formalized
accounting/financial supervision) and specific instructions on operational risks (e.g.
collecting and monitoring operational losses);
Periodic control.
45
Banca Transilvania’s strategy for lowering exposure to operational risk is based on:
permanent compliance of internal regulations with legal regulations and market conditions,
personnel training, IT upgrades and consolidation of security systems, taking measures to
limit/reduce the effects of operational risk incidents, applying recommendations and
conclusions resulted from the abovementioned controls, and updating continuity plans.
To limit the effects of operational risk, the Bank also considered taking out specific
insurance policies.
Reputational Risk
Reputational risk is the current or future risk that the Bank’s profit and capital may be
negatively affected as a result of the unfavourable perception of the Bank’s brand by
customers, counterparties, shareholders, investors or regulators.
The Group’s objective regarding reputational risk management is to ensure the
maintenance/consolidation of the Bank’s good brand image, in line with the Bank’s strategy
and values.
Reputational risk management is a permanent process coordinated by the structures
established to undertake actions to maximize the Group’s reputation, in corroboration with
the sustainable development of the Group’s business.
Strategic Risk
Strategic risk is the impact on earnings or capital arising from changes in the business
environment, adverse business decisions, improper decision implementation or lack of
responsiveness to economic changes.
Strategic risks are approached based on the following qualitative elements:
•
•
•
risk management practices are integral part of strategic planning;
exposure to strategic risk reflects planned objectives which are not excessively
aggressive and are compatible with the business policies;
Business initiatives are well conceived and supported through adequate
communication channels, operating systems and delivery networks.
Banking Laws
The Bank must comply with the Banking regulations, including such applicable norms
related to lending limits and investment activities and with the regulations regarding the
compliance with certain financial ratios. The Romanian Banking regulations have
46
undergone significant changes over the last years. Amendments to the existing legislation or
enactment of new regulations may bear a major negative impact on the Bank’s activity, its
financial conditions or operational earnings.
4.3.
Risks related to the Bank and the Bonds
Business Environment; Dependence on Romanian Economy
The activity of the Bank depends on the Romanian economy, but not to a greater extent than
the activity of the other Romanian Banks of the same size. Therefore, despite the prudent
policy of the Bank, the financial performance of the Bank (especially its capacity to
increase its profits) depends on the development of the Romanian economy.
The economic situation of Romania, afflicted by the recession it has been undergoing since
2008, showed the first positive signs at the end of 2011, when it registered a slight growth.
Following the financial consultancy services contracted by the Romanian Government from
the International Monetary Fund (2009), the Government adopted a series of legislative
measures aiming at economic reform, which led to a more stable economy in early 2011, as
confirmed by the evaluation report submitted by the IMF.
Also, the International Monetary Fund has cut the government bond risk in August 2012,
after most of the political conflicts had been settled once the final decision of the
referendum from 29th of July was known, according to BNP Paribas.
The IMF and Romania reached a staff-level agreement to unlock the next tranche of a
precautionary 5 billion-Euro ($6.2 billion) loan, as established on Aug. 14 after a review of
the country’s loan accord. The leu is slightly undervalued and has scope to appreciate
A possible delay in Romania’s stabilization and economic growth could be detrimental to
the macro-economic results of Romania, and consequently to the Bank’s activity, its
financial conditions or operational earnings.
Liquidity of the Bonds and the Shares
At this time, the Bank does not intend to list the Bonds for trading on the BVB. If at some
point in the future, the Bank does list the Bonds on the BVB, no guarantee can be given
regarding the liquidity of the Bonds or their trading value on the secondary market.
Moreover, the BVB is a rather new and small stock exchange, and has the similar issues as
other small stock exchanges in emerging countries with respect to the fragility and volatility
of the market and value of the quoted securities. The Bonds and the Shares may be
influenced by these factors.
In addition, the market for quoted bonds on the BVB is particularly small and characterized
47
by a low level of liquidity. Furthermore, although the Shares are currently listed on the
BVB, the average trading volume for the shares is very small, resulting in a very low level
of liquidity. The procedures of settlement, compensation and registration of transactions
with securities are not as efficiently developed as those on the developed securities markets.
No Credit Rating of the Bonds
The Bank has been evaluated and rated since 2009 by Fitch Ratings, but the Bonds subject
to the Offer will not be evaluated and rated. Investment in the Bonds may represent a
greater risk than an investment in rated securities.
Convertible subordinated unsecured Bonds
The Romanian market is still very poorly developed with respect to bonds convertible into
shares. Therefore, practices and precedents regarding the conversion of the Bonds, as well
as other aspects involved in the issuance of convertible bonds are almost non-existent.
The reduced number of bond issuances in Romania on the regulated markets resulted in an
absence of common practices and precedents regarding the protection of the bondholders'
rights. Special provisions dedicated to this type of investors should also be developed.
The Bonds are unsecured and, therefore, the risk of non-payment of the principal and
interest of the Bonds is not directly supported by collateral.
The income from investing in the Bonds may be affected by changes in laws applicable to
bonds. Please see section "Tax Matters".
Subordination
Without any prejudice to right of the investors in the Bonds subject matter of the present
Prospectus to retain amounts already paid to investors in accordance with this Prospectus, in
the event of any bankruptcy or liquidation of the Issuer (whether voluntary or involuntary):
(1) in accordance with the banking laws (including, without limitation Regulation
18/2006, the payment of any amounts payable hereunder shall be subordinated to the
full payment of all unsubordinated indebtedness, so that no amount shall be payable to
the Bondholders in such bankruptcy, or liquidation of the Issuer, until all claims in
respect of unsubordinated indebtedness admitted in such bankruptcy or liquidation of
the Issuer have been satisfied; and
(2)
following the satisfaction of all claims in respect of unsubordinated
indebtedness admitted in such bankruptcy or liquidation of the Issuer, the
Bondholders shall be entitled to receive and to retain any payment or distribution in
respect of the Bonds and all other amounts outstanding hereunder pari passu with any
other present and future subordinated indebtedness of the Issuer.
In compliance with the NBR subordination requirements (including without limitation
Regulation no. 18/2006), the Bondholders shall have no right to offset any amount owed by
48
them to the Issuer against any amount owed by the Issuer to the Bondholders. Any amount
relating to the Bonds or the interest due and unpaid by the Issuer under this Prospectus can
be recovered by the Bondholders only pursuant to bankruptcy and liquidation of the Issuer
and strictly in accordance with Romanian law. Likewise, the Bondholders agree that, in the
event of bankruptcy or liquidation of the Issuer, the Bonds will have an inferior rank against
the unsubordinated indebtedness and the Bondholders assure that they will take any action
necessary to ensure such classification.
The floating interest rate
A holder of a bond with a floating interest rate is exposed to the risk of fluctuating interest
rate levels and uncertain interest income. Fluctuating interest rate levels make it impossible
to determine the yield of such Bonds in advance.
The terms and conditions of the Bonds, including the proposed spread have been approved
by Banca Transilvania’s General Shareholders Meeting on April 27, 2012 and October 30,
2012. Changes in market conditions and/or perception of BT’s risk could affect the price of
the Bonds and consequently the corresponding yield.
The Bonds may not be suitable investment for all investors.
Each potential investor in the Bonds must determine the suitability of that investment in
light of its own circumstances. In particular, each potential investor should:
a. Have sufficient knowledge and experience to make a meaningful evaluation of the
Bonds, the merits and risks of investing in the Bonds and the information contained
or incorporated by reference in this Prospectus or any applicable supplement;
b. Have access to, and knowledge of, appropriate analytical tools to evaluate, in the
context of its particular financial situation, an investment in the Bonds and the
impact the Bonds will have on its overall investment portfolio;
c. Have sufficient resources and liquidity to bear all the risks of an investment in the
Bonds including where the currency for principal or interest payment is different
from the potential investor’s currency;
d. Understand thoroughly the terms of the Bonds and be familiar with the behaviour of
any relevant financial markets; and
e. Be able to evaluate (either alone or with the help of a financial adviser) possible
scenarios for economic, interest rate and other factors that may affect its investment
and its ability to bear the applicable risks.
The Bonds are complex financial instruments. Sophisticated institutional investors
generally do not purchase complex financial instruments as stand-alone investment.
They purchase complex financial instruments as a way to reduce the risk or enhance
yield with an understood, measured, appropriate addition of risk to their overall
portfolios. A potential investor should not invest in the Bonds unless it has the expertise
(either alone or with a financial adviser) to evaluate how Bonds will perform under
changing conditions, the resulting effects on the value of the Bonds and the impact this
49
investment will have on the potential investor’s overall investment portfolio.
Independent review and advice
Each prospective investor in the Bonds must determine, based on its own independent
review and such professional advice as it deems appropriate under the circumstances,
that its acquisition of the Bonds is fully consistent with its financial needs, objectives
and conditions, complies and is fully consistent with all investment policies, guidelines
and restrictions applicable to it and is a fit, proper and suitable investment for it,
notwithstanding the clear and substantial risks inherent in investing in or holding the
Bonds.
Each prospective investor should consult its own advisers as to legal, tax and related
aspects of an investment in the Bonds. A prospective investor may not rely on the Issuer
or the Broker or any of their respective affiliates in connection with its determination as
to the legality of its acquisition of the Bonds or as to other matters referred to above.
Legal investment considerations may restrict certain investments
The investment activities of certain investors are subject to legal investment laws and
regulations, or review or regulation by certain authorities. Each potential investor should
consult its advisers to determine whether and to what extent (1) the Bonds are legal
investments for it, (2) the Bonds can be used as collateral for various types of borrowing
and (3) other restrictions apply to its purchase or pledge of the Bonds. Financial
institutions should consult their legal advisors or the appropriate regulators to determine
the appropriate treatment of the Bonds under any applicable risk-based capital or similar
rules.
Considerations related to the prerogatives of the general Bondholders’ meeting
According to the laws of Romania, the general Bondholders’ meeting has the authority to
hold deliberations referring to certain important events related to the Issuer, such as the
issuance of new bonds or changes in the Issuer’s Articles of Association, which may affect
the Bondholders’ rights. The legal provisions in force allow the defined majorities to adopt
decisions which become binding and take effect for all Bondholders, including those who
did not attend and did not vote during the respective meetings, as well as those who voted
against.
In addition, any legal action initiated against the Issuer by one or more Bondholders will not
be admissible in case it has the same object as the legal action brought forward by the
representative of the Bondholders or if it is contrary to any decision of the Bondholders’
meeting.
50
Risks related to the Shares
Taking into consideration the convertibility of the Bonds into Shares below is presented
a brief description of the risks related to Shares.
The market price of the Shares is volatile and could be adversely affected by future sales
of Shares on the open market.
The market price of the Shares is volatile and subject to sudden and significant declines.
Price declines can result from a variety of factors, including the difference between the
results the Issuers announces and forecasts by equity analysts; and general share price
volatility on the markets where the Shares are listed or on worldwide markets. As a
result, investors may experience a material decline in the market price of the Shares.
A suspension of trading in the Shares could adversely affect the Share price.
The CNVM is authorized to suspend or request the relevant regulated market on which
the Shares are admitted to trading to suspend such securities from trading for various
reasons. The CNVM is further authorized to instruct the BVB to suspend trading in an
Issuer’s securities in connection with measures taken against market manipulation and
insider trading. The operator of a regulated market over which the CNVM has
supervisory jurisdiction must suspend trading in securities which no longer comply with
the rules of the regulated market unless such a step would be likely to cause significant
damage to investors’ interests or the orderly functioning of the market. If the operator of
the regulated market does not do so, the CNVM could demand the suspension of trading
in securities, if it is in the interest of the orderly functioning of the market and does not
impair investors’ interests. Likewise, the operator of a regulated market is entitled to
suspend the trading of shares in other circumstances in accordance with its own rules.
Any suspension in the trading of the Shares could adversely affect the Share price.
Shares traded on the BVB are less liquid and more volatile than shares traded on other
major stock exchanges
The market for trading in the Issuer’s Shares is the regulated spot market operated by
the BVB. Shares traded on the BVB regulated market are less liquid than shares traded
on major markets elsewhere in Europe or the United States. Consequently, holders of
Shares may face difficulty in buying and selling the Shares, especially in large blocks.
Shares and other securities of companies trading on the BVB have in the past
experienced substantial fluctuations in their market price. This has in the past affected,
and may in the future affect, the market price and liquidity of shares of companies listed
on the BVB, including the market price and liquidity of the Issuer’s Shares.
51
52
5. INFORMATION ABOUT THE ISSUER
History and development of the Bank
5.1. Issuer’s business name and trade name
The company’s business name is BANCA TRANSILVANIA S.A.
5.2. Issuer’s place and number of registration
The Bank is organized in Romania and registered with the Trade Register attached to the Cluj
District Court under no. J12/4155/1993, having the Tax Identification Number 5022670.
5.3 Issuer’s date of incorporation and term
The Bank is organized as a joint-stock company under the laws of Romania; in compliance
with art. 5 of the Articles of Incorporation, the Bank is established for an indefinite term.
5.4. Issuer’s registered office and legal form, legislation under which it carries out its
activity
The Bank’s registered office is located at 8 G. Baritiu Street, Cluj-Napoca, Romania. The Bank
can be contacted at the registered office or via telephone at the numbers displayed on its
website: www.btrl.ro or www.bancatransilvania.ro .
The Bank is organized in Romania as a joint-stock company, being governed by the Romanian
laws, such as:
• The Companies Law;
• The Banking Law;
• The Capital Market Law;
•
•
•
Ordinance no. 10/2004 on the judicial reorganisation and bankruptcy of credit
institutions
All standards, regulations and circular letters issued by the National Bank of Romania
and CNVM
Any legislation applicable to Romanian credit institutions
5.5. Recent events related to the Issuer and relevant in determining its solvency
The Bank is aware of no such recent event which could be relevant in assessing its solvency.
For prudential purposes, the IFRS provisioning methodology and Profit and Loss Account for
H1 2012 have been audited.
Banca Transilvania’s capital adequacy ratio, including the audited profit for H1 2012 continues
to be at a comfortable level of 11.27%.
5.6.
Investment
A description of the principal investments made since the date of the last published financial
statements.
Information concerning the Issuer’s principal future investments, for which its management
53
bodies have already made firm commitments.
Information regarding the anticipated sources of funds needed to fulfil previously mentioned
commitments.
The investments budget for 2012 includes:
Agencies and buildings
IT Investments and cards:
• IT Core and CRM
Vehicles
Other investments
Bank Investments
Investments in subsidiaries
Total investments
41.021.000 lei
48.510.000 lei
29.667.000 lei
1.888.000 lei
7.226.000 lei
98.645.000 lei
15.225.000 lei
113.870.000 lei
6. OVERVIEW OF ACTIVITIES
6.3.
Main Activities
Retail Banking
To address the retail banking market, the Bank focuses on family needs, including both
deposits and a large variety of loans.
Term deposits are offered in a broad range of maturity options (from overnight to 18
months) with fixed or variable interest rates and an option to negotiate interest rates for
high value deposits. The market reaction to the Bank's deposit products was excellent,
earning the Bank second place in Romania according to the survey conducted by Capital
(financial publication).
The Bank's credit facility offerings are also extensive, consisting of home loans,
consumer and car loans, stock purchase facilities and student and tourist loans. In
particular, recent developments in the Romanian economy resulted in a boom in the real
estate industry. Partly due to the Bank's expansive territorial network and quick
processing of loan applications, the Bank established an early presence on the home loan
market, building a significant market share (9-10% currently) before other banks entered
the market. The Bank is considered by many individuals as their "family Bank" based on
an established long-term relationship.
Corporate and Commercial Banking
As a commercial bank, the Bank's objective is to identify its customers' needs at an early
stage and to develop corporate & commercial finance products to offer an appropriate
54
solution. This client service approach combines the product know-how with our market
knowledge and understanding.
To offer products and services appropriate for individual needs and to ensure a swift
response to clients, specialized departments have been established at headquarter level.
The Bank's nationwide network leads to efficient distribution by being close to clients
and businesses. In addition, a dedicated relationship manager is assigned to each client,
offering tailor-made solutions, professional expertise and knowledge in the client's
business sector.
The Bank's corporate & commercial products and services target both SME's and large
businesses, being adapted to the nature, scope and size of the corporate operations. It
includes cash management services, comprehensive payment clearance, short to long
term credit facilities, foreign trade service and financing - including factoring, guarantees
and warranties, bills of exchange, etc.
To maximize client satisfaction, the Corporate & Commercial Division works in close
co-operation with the Bank's Treasury and Settlements Division, allowing for
experienced banking officers to provide the best solutions and practices. In addition to
standard services, the Bank offers financial advisory services specifically tailored to
clients, including financial restructuring. Further, through the BT Financial Group,
several other financial services, such as leasing, insurance, brokerage and asset
management are offered.
6.4.
Main Markets
The Romanian Banking System
(Source: National Bank of Romania, Annual Report 2011, pages 79-81)
The structure of Romanian banking system posted no significant changes in 2011. The year
under review witnessed BCR taking over the activity of the Anglo-Romanian Bank and the
transfer of the shares held by the state in Banca de Export-Import a României (Export-Import
Bank of Romania) – Eximbank from under the management of AVAS to that of the Ministry of
Public Finance, in compliance with the provisions of Government Emergency Ordinance No.
83/2011. Changes took place in the shareholding of Volksbank România S.A. whose majority
shareholder is VBI Beteiligungs GmbH and that of Marfin Bank România whose new majority
shareholder became Marfin Popular Bank Public Co Ltd. Cyprus after merging with Marfin
Egnatia Bank of Greece. The names of certain credit institutions were also changed, as in the
case of the Bucharest branch of Caja de Ahorros y Pensiones de Barcelona (La Caixa), which
became Caixa Bank and Libra Bank turned into Libra Internet Bank.
55
Therefore, compared with 2010, the number of foreign bank branches dropped by one, to eight
entities at end-2011, whereas the number of Romanian banks remained unchanged, i.e. 33
entities, including Central Cooperatist Bank CREDITCOOP.
Table 1. Banking system by ownership
Number of banks, end of period
2010
2011
32
32
Banks, Romanian legal entities,
of which:
Banks with fully or majority state-owned
capital
Banks with majority private capital,
of which:
- with majority domestic capital
- with majority foreign capital
Foreign bank branches
Total banks and foreign bank branches
CREDITCOOP
Total number of the credit institutions
2
2
30
30
4
26
9
41
1
42
4
26
8
40
1
41
In terms of share capital, the composition of Romanian banking system at end-2011 was as
follows: two banks with fully or majority state-owned capital (CEC Bank and Eximbank), four
banks with domestic majority private capital (Banca Transilvania, Banca Comercială
CARPATICA, Libra Internet Bank and Banca Comercială Feroviara), 26 banks with majority
foreign capital, eight foreign bank branches and one licensed cooperative organisation (Central
Cooperatist Bank CREDITCOOP).
Table 2. Market share of credit institutions
Banks with Romanian capital
of which:
- with majority state-owned capital
- with majority private capital
Banks with majority foreign capital
I. Total commercial banks
II. Foreign bank branches
Banks with majority private capital
including foreign bank branches
Total
foreign-owned
banks,
including branches of foreign banks
Total banks and foreign bank
End period
Net assets balance sheet
2010
2011
Mil.ron
%
Mil.ron
%
50 377,2
14,7
59 294,2
16,8
25 207,4
25 169,8
267 075,7
317 452,9
23 697,1
315 942,6
7,4
7,3
78,1
92,8
7,0
92,4
28 990,1
30 304,1
265 381,6
324 675,8
28 381,2
324 066,9
8,2
8,6
75,0
91,8
8,0
91,6
290 772,8
85,1
293 762,8
83,0
341 150,8
99,8
353 057,0
99,8
56
branches (I+II)
CREDITCOOP
Total credit institutions
796,3
341 946,3
0,2
100,0
853,9
353 910,9
0,2
100,0
At end-2011, the share of assets held by banks with fully or majority private capital in total
assets of the Romanian banking system amounted to 91.8 percent, while banks with fully or
majority state-owned capital held only 8.2 percent. The share of assets held by banks with fully
or majority foreign capital, including foreign bank branches, equalled 83 percent of total assets
of the Romanian banking system.
Table 3. The share of credit institutions in Aggregate Capital
End period
Share capital
Banks with Romanian capital
of which:
- state-owned
- with majority private capital
Banks with majority foreign capital
I. Total commercial Banks
II. Branches of foreign Banks
Total Banks with majority private
capital, including foreign Bank
branches
Total
foreign-owned
Banks,
including branches of foreign Banks
Total number of Banks and
branches of foreign Banks (I+II)
CREDITCOOP
Total number of the credit
institutions
2010
Mil.lei
3 794,8
%
22,4
2011
Mil.lei
4 166,2
%
22,8
1 795,6
1 999,2
12 632,9
16 427,7
393,7
15 025,8
10,6
11,8
74,6
97,0
2,3
88,7
1 848,4
2 317,8
13 701,4
17 867,6
295,7
16 314,9
10,1
12,7
74,9
97,7
1,6
89,2
13 026,6
76,9
13 997,1
76,5
16 821,4
99,3
18 163,3
99,3
122,7
16 944,1
0,7
100,0
126,0
18 289,3
0,7
100,0
At end-2011, the top five banks in terms of asset size held the following shares: 54.6 percent of
aggregate assets, 52.3 percent of loans, 58.0 percent of deposits, 52.8 percent of equity capital
and 59.7 percent of government securities. In terms of bank capitalisation, share/endowment
capital of the Romanian banks was larger from a year earlier, in both nominal and real terms, by
7.9 percent and 4.7 percent respectively, due mainly to shareholders’ capital increases in cash
contributions and net profit distribution for the previous year.
As regards the country of origin of the capital invested in domestic banks and foreign bank
branches operating in Romania at end-2011, the top three countries were further Greece (22.9
percent in aggregate capital), Austria (20.8 percent) and well behind the Netherlands (11.5
percent).
57
Table 4. Foreign equity capital of credit institutions in Romania until December 31, 2011
Greece
Austria
Netherlands
Italy
Hungary
Cyprus
France
EBRD
Other countries
Portugal
Israel
Germany
SUA
Aggregate foreign capital of
the banking system
Sum of the credit institutions
Mil. ron
4 192,5
3 795,8
2 102,3
899,5
661,2
653,9
578,5
261,7
350,6
267,1
247,8
191,9
152,2
14 455,0
%
22,9
20,8
11,5
4,9
3,6
3,6
3,2
2,0
1,7
1,5
1,4
1,1
0,8
79,0
18 289,4
100,0
In the context of Romania's EU accession and the liberalization of services, 349 foreign
institutions have notified their intention to conduct a direct banking in Romania, of which 230
banks, 3 non-bank financial institutions, 16 electronic money issuer institutions and 100 payment
institutions.
The Economy of Romania – General Information
The first semester of 2012 has seen a growth in GDP of 0.7% compared to the first semester of
2011, according to INS (National Institute of Statistics). Harsh winter conditions dragged down
economic activity in the first quarter (0.1% q-o-q) but growth recovered in the second quarter
(0.5% q-o-q) due to robust investment and private consumption. However, the severe summer
drought, waning consumer confidence and renewed difficulties in absorbing EU funds point to a
bleaker outlook. Weak economic activity is expected to depress import demand, keeping the
current-account deficit broadly stable. Risks to growth continue to be tilted to the downside in
2012 but become more balanced over the forecast horizon.
GDP growth for 2012 is forecast to be relatively subdued at about 0.8%, with domestic demand
as its main driver.
In 2013, GDP growth should recover to 2.2%. While investment is the main component behind
growth, it is projected to slow down compared to 2012 due to depressed activity in the rest of the
EU and domestic uncertainties.
58
After temporary downward pressure on headline inflation in the first half of the year, inflation
increased to 5.4% in September. Going forward, annual inflation is currently projected to
average 4.9% in 2013 and 3.3% in 2014.
6.5.
The basis for any statements made by the Issuer regarding its competitive
position.
While maintaining position within a difficult economic environment, Banca Transilvania has
focused on finding the right financial solutions for customers, thus offering improved services
that are adapted to the current market conditions.
7. THE ORGANIZATIONAL STRUCTURE
7.1. If the Issuer is part of a group, a brief description of the group and of the Issuer’s
position within it.
Banca Transilvania Financial Group
This Financial Group was established in 2003 and it is made up of 16 companies. Banca
Transilvania is the main component of the group, promoting a strategy of expanding the range
of financial services offered to customers.
The Group operates in financial sectors such as banking, investment management, consumer
finance, leasing and security trading. The full spectrum of financial products, both banking
and those provided by the Group’s subsidiaries, are offered to clients through a unique
distribution network under the far-famed BT logo.
On the savings segment, in addition to traditional products, the offer also includes asset
management (BT Asset Management) created both for the retail market, as well as for
exclusive customers, interested in customized premium products and services. Consequently
there are excellent professional relations with high income customers, some of which are
conducted by means of the Private Banking division. The offer of products is completed
through the activities of brokerage (BT Securities) and leasing (BT Leasing), as viable
options for direct investments or flexible financing. The credit offensive in the retail area is
supported by consumer finance (BT Direct), offering easy access to potential customers
through the distribution networks of consumer goods.
Special attention is given to the medical sector, both through the existence of a specialized
banking division (Healthcare Division) and through the direct financing of various specific
needs (BT Medical Leasing). A general feature for all lines of business is represented by the
great desire to serve clients, from the retail sector, private banking, small and medium
59
businesses, as well as corporate segment.
The strategy of BT Financial Group consists of encompassing both the entire offer of
products and services, under the unique logo and prestigious name of Banca Transilvania on
the local market, together with serving all current and potential customers with the widest
possible range of products.
The Bank provides subsidiaries with an adequate degree of capitalization by contributing to
the improvement of risk management, as well as by involving the audit and compliance
functions of the Bank.
The subsidiaries of the group, where the Bank holds direct shares and the quota of
shareholding in 2012:
Subsidiary
Field of activity
%Direct
%Total
holding
holding
BT Securities S.A.
Investment/brokerage
98,67%
98,67%
BT Leasing Transilvania IFN Leasing
44,30%
100,00%
S.A.
BT Investments S.R.L.
Investments
100,00%
100,00%
BT Direct IFN S.A..
Consumer finance
93,70%
100,00%
BT Building S.R.L.
Real estate
4,17%
100,00%
BT Asset Management S.A.I. Assets management
80,00%
80,00%
S.A.
Factoring Company SRL
Factoring
99,18%
BT Medical Leasing IFN Leasing
99,99%
100,00%
S.A.
BT Leasing Moldova
Leasing
100,00%
100,00%
Within the group there are six other companies in which the Bank has indirect holdings (BT
Solution Agent de Asigurare SRL, BT Safe Agent de Asigurare SRL, BT Intermedieri Agent
de Asigurare SRL, BT Finop Leasing SA, Rent a Med S.R.L., BT Asiom Agent de Asigurare
S.R.L.,.). The Bank has more holdings in two investment funds (BT Invest and BT Invest1)
where the direct holding is of 91,43 %, respectively of 100.00 %.
BT Leasing Transilvania IFN S.A.
BT Leasing Transilvania IFN S.A. was set up in 1995 and currently operates as a non-bank
financial institution, focusing on financing the acquisition of tangible assets by means of
leasing.
The company's registered office is located at 1, George Baritiu Street, Cluj-Napoca. The
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company proposes financing solutions for customers, providing fast and simplified access to
financial support, as well as personalized offers and financial consulting for choosing the
optimal solution.
BT Leasing has offices open in several cities in the country: Cluj-Napoca, Bucharest, Oradea,
Iasi, Arad, Sibiu, Brasov, Craiova, and Constanta.
There were 109 employees and 2.511 contracts on December 31, 2011, respectively 108
employees and 3.133 at the end of 2010, with leasing claims (mainly without VAT) in
amount of 117 million lei in 2011, respectively 158 million lei in 2010.
BT Medical Leasing IFN S.A.
BT Medical Leasing IFN S.A. is a company based in Bucharest, specialized on the niche of
financial leasing for the purchase of medical equipment. Due to the experience in the medical
field, over the years, Medical Leasing has extended its activity all over the country.
As a result of the acquisition of shares from minority shareholders made by the Bank in 2010
and the shareholding increase from 57.39 % to 99.99 %, the company changed its name from
Medicredit Leasing to BT Medical Leasing, thus becoming a BT company. In 2010, the
company aimed to define and implement synergies with the Bank’s Healthcare Division,
through the integration of products and workflows.
On the background of the financial crisis, the market of equipment financed through financial
leasing has significantly diminished, which has led to customers experiencing difficulties in
debt repayment and, therefore, to delays.
BT Leasing Moldova
The company started its operational activity in the Republic of Moldova in 2008, with
headquarters located in Chisinau. BT Leasing MD promotes financial leasing, ensuring
financing through leasing of motor vehicles, machinery and equipment.
All processes are carried out at the registered office, in terms of sales, risk management,
operational performance and customer service, as the company is not structured on branches
and agencies.
In 2011, BT Leasing MD financed goods worth over 4.8 million Euro (input value), 20
percent more than in 2010, while signing 179 leasing contracts. On December 31, 2011 the
leasing portfolio was worth 3.4 million Euros, on the rise by 35% as compared to December
31, 2010, maintaining good portfolio quality.
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BT Asset Management SAI SA
The company is specialized in the management of assets, with activities in the field of closedend and open-end fund administration. The shareholding structure is the following:
• Banca Transilvania 80%
• SIF Banat Crisana 10%
• SIF Oltenia 10%
At the end of 2011, the company was 4th amongst investment fund administrators, with a
market share of 4.33 % and over 8,000 active investors. More than half the number of
investors chose the fixed-income product (BT Obligatiuni), an excellent alternative to savings
accounts. At the end of 2011, the assets under management reached lei 295.9 thousand, on the
rise by more than 13% as compared to 2010.
BT Asset Management offers a complete range of products and investments, such as fixedincome funds or stock funds. Customers can invest on the capital market both in Romania and
Austria, using either Ron or Euro. The continuous trend of significant increase in the value of
assets managed in 2011 occurred in the context of preserving the attractiveness of products,
attractiveness given by the efficiency reported within a good economic environment which
still remains difficult.
BT Direct IFN SA
BT Direct was established in 2003, as a limited liability company under Romanian laws, with
registered offices in Cluj-Napoca. During the General Shareholders Meeting of July 4, 2006,
it was decided to turn BT Direct from a limited liability company into a non-bank financial
institution, in order to comply with provisions related to its operations.
BT Direct offers financing services for the purchase of durable goods through related credit
agreements and credit for personal use.
In 2011 there were 11.613 contracts, 8.871 of which had related credit agreements, amounting
to 18.1 million lei, respectively 2.760 credit contracts for personal needs, amounting to 20.2
million lei. BT Direct signed cooperation agreements for financing active customers with a
number of 738 shops. The total value of revenues for 2011 increased by 16 % compared to
the value achieved in 2010, the company registering positive annual results.
BT Investments SRL
BT Investments was established in 2002 by the Bank for the purpose of granting contract
loans. In 2006, the company redefined its activity based on NACE code 6619 - Other
activities auxiliary to financial services, except insurance and pension funding. Since its
establishment, the share capital increased successively by means of capital inflow or
capitalization of reserves, reaching 50,939 thousand lei as at December 31, 2011.
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Until December 31, 2011 the units held reached 55,417 thousand lei. On establishing the
value of the securities held by the company the evolution of the market stock was taken into
account, with provisions constituted for negative differences.
BT Securities S.A.
It was established in 2003 as a result of changing the name and registered offices of
Transilvania Capital Invest company. The shareholding structure is as follows: 98.61% held
by the Bank, 1.39 % natural and legal persons. The company’s activity consists of the
intermediation of financial transactions and auxiliary activities.
In 2011, BT Securities carried out its activity while the Romanian capital market was
undergoing a crisis period. The main companies quoted on the stock exchange registered
sharp falls of stock quotations, in conjunction with a dramatic drop in transaction volumes.
During the second half of the year, the progress of mediation activities was strongly
influenced by the economic crisis, displayed by the decrease of transaction values and fall of
the average percentage of commissions charged to customers.
Compania de Factoring S. R. L.
In 2011, Compania de Factoring kept the trend of the previous year, aiming to reach
maximum efficiency for the collection process.
As a result, Compania de Factoring managed to partially recover overdue amounts worth
991.318 lei.
The management of the company continues to apply the necessary measures in order to
support the development of its activity, despite current market conditions, by:
• Restructuring certain bank loans;
• Improving the level of recovery of the credits granted to customers;
• Constant monitoring of liquidity;
• Daily tracking of flows of treasury and the evaluation of effects upon the creditors.
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The Bank’s
ORGANIZATIONAL STRUCTURE
7.2. If the Issuer is dependent upon other entities within the group
Banca Transilvania is not dependent on any entity within the Banca Transilvania Financial
Group.
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ORGANISATIONAL CHART OF BANCA TRANSILVANIA FINANCIAL GROUP
Entities of Banca Transilvania Financial Group at which
Banca Transilvania has direct ownership
65
Entities of Banca Transilvania Financial Group where
Banca Transilvania has indirect ownership and the
subsidiaries which ensure its participation
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8. INFORMATION ON TRENDS
8.1. Statement that there has been no material adverse change in the prospects of the
Issuer since the date of its last published audited financial statements. In the event that
the Issuer is unable to make such a statement, provide details of this material adverse
change.
The Bank declares that there has been no material adverse change in the prospects of
the Bank since the last published audited financial statements, respectively 31st of
December 2011
8.2. Information on any known trend, uncertainty or requirement or any commitment
or event that could significantly influence the Issuer's prospects, at least for the current
financial year.
The Bank is not aware of any tendency, commitment, or event which may have a negative
effect upon the Issuer’s prospects for the financial year in progress.
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9. BODY OF ADMINISTRATION, MANAGEMENT AND SUPERVISORY
The management of the Bank is carried out by the Board of Directors and the managers. The
correspondence address for Board of Directors members and managers of the Bank is:
Cluj-Napoca, str.G.Baritiu, nr.8
According to Bank’s Articles of Association, the Board of Directors has 7 members.
The current composition of the Board is the following:
Name
Ciorcila Horia
Marzanati Roberto
Franklin Peter Morris
Retegan Carmen
Palagheanu Radu Danut
Ceocea Costel
Position
Chairman of the Board of Directors
Vice-Chairman of the Board of Directors
Non-Executive member of the Board of Directors
Mr. Horia Ciorcila was born in 1963 in Cluj-Napoca and graduated from the Faculty of
Automation and Computer Science in 1989. In 1993 he participated, as a founding member,
in the establishment of the Bank and certain companies within the BT Group (financial
activities such as insurance, leasing etc.). He also participated as founding member in other
businesses, such as the group of companies Maestro Industries and Astral TV.
He has been a member of Banca Transilvania’s Board of Directors since the very beginning
and starting with 2002, he is Chairman of the Board.
Mr. Roberto Marzanati was born in 1950 and graduated from the Business Administration
School of Torino, Italy. He began his banking career in 1973 and gained impressive
professional expertise with several banking institutions such as Hypo-Alpe Adria Bank
(Croatia) as a member of the Supervisory Board, Market Banka (BiH) as a member of the
Board of Directors, and Raiffeisen Bank Sarajevo. He was also a member of the Supervisory
Board of Slavonska Banka (Croatia) and a member of its Credit Committee (appointed in
July 2001), and between 2001 and 2008 he served on the Board of Directors of Export Credit
Bank, Skopje, Macedonia. In 1993, Mr. Marzanati became Senior Consultant within EBRD
London, and in 1997 he became Senior Banker. In 2002, he was appointed member on Banca
Transilvania’s Board of Directors.
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Mr. Peter Morris Franklin was born in 1953 in Hong Kong. In 1974 he graduated from
Oxford University, United Kingdom. The banking career of Mr. Peter Morris Franklin began
in 1979 at HSBC - London and Hong Kong and in 1980 he became Vice-President of
Corporate Banking - London. In 1984 he was appointed Vice-President of the Capital
Markets at Chase Manhattan Bank - Hong Kong and, in 1987, Manager of the Capital
Markets of ANZ Bank - Hong Kong. In 1992 he was treasurer of GE Capital Asia Pacific,
Hong Kong & Singapore and in 1997 he was appointed Financial Manager. He became
Financial Manager of GE Consumer Finance Europe – Dublin in 2000, while in 2002 he
accepted the same position within GE Real Estate Europe - Paris. He was Financial Manager
of GE Corporate Financial Services Europe – London from 2006 until 2008, when he took on
the same position at GE Money Central Eastern Europe - Paris.
He has been a member of BT’s Board of Directors since April 2010.
Mrs. Carmen Retegan was born in 1959 in Galati. In 1982 she graduated from the Faculty
of Electronics and Telecommunications of the Polytechnic University of Bucharest later
attended The School of Business Management William E. Simon of the University of
Rochester. She started her career in 1996 within Seattle Northwest Securities - Seattle USA as
Portfolio Manager of mortgage-backed securities. In 1998 she became Manager of Capital
Markets at Creditanstalt Investment Bank Austria, Bucharest. In 2002 she was appointed
General Manager of the Romanian American Enterprise Fund - Bucharest - and served as
Member on the Board of Directors (BoD). Starting with 2008 she is the General Manager and
a BoD Member of Verida Credit IFN – Bucharest. She has been a member of BT’s Board of
Directors since April 2010.
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Mr. Radu Danut Palagheanu was born in 1951 in Cluj-Napoca. In 1976 he graduated from
the Faculty of Electrical Engineering within The Polytechnic Institute of Cluj-Napoca. He
started his career in 1977 - within I.S.C.I.P. as Head of Mechanical-Energy Sector - ClujNapoca. In 1985 he was transferred to the Regional Centre for Electronic Computing as
Expert Instructor – Cluj-Napoca and starting 1990 - The Territorial Directorate for Matters of
Labour and Social Protection - as Head of the Labour Norms Office - Cluj-Napoca. In 1991
he pursued a career in the private sector as General Manager of S.C. Compexit Import Export
S.R.L. – Cluj-Napoca - and in 1992 as General Manager at S.C. Snowmobiles Compexit
S.R.L. – Cluj-Napoca. He was one of Banca Transilvania’s founding members in 1993.
He was a member of the Bank’s Board of Directors (BoD) from 1994 to 1995, while in 1995
he became the General Manager of S.C. Compexit Trading S.R.L. Cluj-Napoca. From April
2010, Mr. Palagheanu regained his capacity as BT’s BoD member.
Mr. Costel Ceocea was born in 1956 in Buzau. He is a graduate of the Faculty of Economics
from "Alexandru Ioan Cuza" University - Iasi and in 2004 he was awarded a Phd in Industrial
Engineering from the "Gheorghe Asachi" Technical University - Iasi. He began his activity in
1976 at CCH Letea Bacau, and in 1981 he became a member of the County Council of Bacau.
In 1991 he was employed by the Chamber of Commerce and Industry of Bacau as officer,
being promoted as Head of Department – The Department of Domestic and International
Relations. In 1994 he was transferred to the Financial Investment Company "Moldova" S.A.
occupying the positions of Officer, Head of Department (1997), Manager (2001), Vicepresident (2005) and Deputy General Manager within the same institution. In 2008 he became
the President and General Manager of the Steering Committee for the Board of Directors of
the Financial Investment Company "Moldova" S.A.
He has been a member of BT’s Board of Directors since April 2010.
Executive Management:
The Executive Management Committee (ECM):
Last name/First name
Position
Vacancy
CEO
Tarcea Nicolae
Deputy CEO
Toderici Leontin
COO
Pojoca Lucia Ana
Executive Manager/Coordination Oradea
Dudoiu Andrei
Executive Manager/Coordination Bucharest
Nistor Gabriela Cristina
Executive Manager/Retail
Moisa Tiberiu
Executive Manager/Corporate&SME
Bucur Ioan Calin
Executive Manager/Risk Management
Runcan Luminita Delia
Deputy CEO
Nadasan Mihaela Simona Executive Manager/Financial Institutions and International
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Doca Nevenca Zoranca
Relations
Executive Manager/Human Resources
Nicolae Tarcea (born 1960) has been working within the Bank since 1996, currently
occupying the position of Deputy CEO. During 1997-2002 he was the Manager of the Legal
Department, offering legal advice, endorsing legal documents and assisting the Bank’s
management.
Moreover, within the Bank he occupied the following positions: Vice-president – member of
the Steering Committee, Secretary of the Board of Directors and Legal Adviser - Head of the
Legal Department. In 1992, he graduated from the Faculty of Law, specialized in Legal
Studies, and in 1985 he graduated from The Polytechnic Institute of Cluj-Napoca, being
trained in Electrical Engineering.
Leontin Toderici (born 1970) graduated from the Technical University of Cluj-Napoca,
Faculty of Automation and Computer Science, Computer Department in 1994 and from the
Faculty of Economics, Banking and Financial Management Department in 2003. In 2005 he
completed the master studies within the "Executive Master of Business Administration”
program, under the patronage of CNAM Paris and Academy of Economic Studies Bucharest, and in 2004 he was awarded a PhD by Babes-Bolyai University of Cluj-Napoca,
Faculty of Economic Studies, in the field of Computer Science for Economics. Since 1996 he
is part of the Banca Transilvania’s team, having occupied the following positions: systems
engineer within Cluj Branch (1997), analyst programmer within BT Headquarters (2000),
Settlements Manager within BT Headquarters (2005), Manager - Deputy Chief Operations
Officer within BT Headquarters (2005), and since November 2005 he is Executive Manager Chief Operations Officer.
Lucia Ana Pojoca (born 1960) began working at Banca Transilvania in 1994, becoming
Branch Manager - Banca Transilvania Oradea (2003), respectively Regional Manager (2005),
and in February 2005 she was appointed Executive Manager, Member of the Management
Committee. She graduated from Babes-Bolyai University – Faculty of Economics – ClujNapoca, specialized on Finance Accounting and in 2005 she was awarded a PhD degree by
the University of Agricultural Sciences and Veterinary Medicine of Banat - Timisoara.
Andrei Dudoiu (born 1974) and graduated in 1997 from the Academy of Economic Studies
of Bucharest, Faculty of Finance, Banking and Accounting. He completed the Executive
MBA program of ASEBUSS Bucharest & Kennesaw State University in 2005, obtaining his
Executive MBA from the University of Chicago Graduate School of Business in 2007. He
worked for ABN AMRO Bank (Romania) as Head of Relationship Managers, respectively
Assistant Relationship Manager (2001) and as Manager of Sibiu Branch (2002), becoming a
part of Banca Transilvania’s team in 2002. During December 2002 - November 2005, he
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occupied the position of Corporate Banking Manager, respectively Corporate and SME Client
Manager and, since November 2005, he is Executive Manager, coordinating BT’s activities in
the areas of Bucharest and Ilfov.
Gabriela Cristina Nistor (born 1966) graduated in 1988 from the Faculty of Economics,
“Al. I. Cuza” University of Iasi. She started her activity in: 1988 in the company SC Maratex
SA Cluj, in 1990 she was part of the team of SC Petrom SA Cluj, and starting with 1992 she
worked for the Municipality of Cluj. She joined Banca Transilvania’s team in 1995 as Credit
Officer, in 1997 she became Marketing Manager, in 1999 - Card Division Manager, in 2003 Card Sales Division and Product Development Manager, and in 2005 - Retail Banking
Manager. She has been Retail Banking Executive Manager since February 2008.
Tiberiu Moisa (born 1975) graduated in 1998 from The Academy of Economic Studies
(ASE), Bucharest, Faculty of Finance, Banks and Stock Exchanges. Moreover, in 2007 he
graduated from the INDE Institute, the Executive MBA program organised by ASE Romania
and CNAM France. In 1998 he began his activity within the National Bank of Greece,
Romania, as Account Administrator (1998), as Compensation Officer (1999), respectively
Head of the Operations Department (2000). He continued the banking activity at ABN
AMRO Bank, as Operations Manager (2001) and Account Manager (2002) within Sibiu
Branch, and starting 2002 he occupied the position of Branch Manager - Tg. Mures. He
joined the team of Banca Transilvania in 2002 and is currently Corporate and SME Client
Executive Manager, member of ALCO, the Human Resources Committee, and he is also the
Coordinating Manager of the two foundations established by BT “Clubul Intreprinzatorului
Roman” (The Romanian Entrepreneurs Club) and “Clujul Are Suflet” (Cluj Has Soul).
Ioan Calin Bucur (born 1967) graduated in 1992 from the Faculty of Economics within
Babes-Bolyai University, Cluj-Napoca. He started his activity in 1991 at The General
Directorate of Public Finance of Cluj, as Duty and Tax Inspector, and in 1993 occupied the
position of Credit Inspector at BCR Cluj. He joined the team of Banca Transilvania in 1995
as Credit Mediator, Head of Credit Department, and Deputy Manager of the Cluj Branch. In
1997 he became Executive Manager of SC Stock Invest Cluj, and starting from 1999 he
occupied several positions at Banca Transilvania, respectively Auditor - Internal Audit
Service (2000), Clerk (2003) – Credits Division, as Clerk Coordinator (2005), Manager
(2009), and since February 2009 he is Executive Manager of the Risk Management
Department.
Delia Luminita Runcan (born 1970) graduated in 1993 from the Faculty of Economic
Sciences at the Babes-Bolyai University of Cluj-Napoca and the Faculty of Law of ClujNapoca, of the „Dimitrie Cantemir” Christian University of Bucharest, in 2001. She started
her activity at Banca Transilvania, as Arbitrator within the Treasury Department. In 1995 she
72
becomes the Head of the Arbitration Department, and starting from 1997 she becomes
Treasury Manager. She is also a member of the Technical Committee for the Management of
Banking Risks, ALCO and secretary of CTALCO. Between 2009-2013 she was the Executive
Manager – Treasury and this year (2013) she has been appointed Deputy CEO of Banca
Transilvania.
Mihaela Simona Nadasan (born 1971) graduated in 1995 from the Faculty of Economics,
Babes-Bolyai University of Cluj-Napoca, Finance and Banking, and in 2005 she graduated
from L'Institut d'Étude du Développement Economique (Conservatoire National des Arts et
Metiers - Paris, and ASE Bucharest), obtaining a diploma in Executive Master of Business
Administration. Her banking experience includes the activity of dealer at Dacia Felix Bank
Cluj-Napoca and, starting with 1995, at West Bank Cluj-Napoca. In 1998 she joined the team
of Banca Transilvania as Treasury Officer. Since January 2009 she has occupied the position
of Executive Manager – Financial Institutions and International Relations, where she
coordinates the entire activity connected to relations with financial institutions and
commercial banks from Romania and abroad, the management of financing lines obtained by
Banca Transilvania in foreign currency, the management of exposure limits on counterparty
banks.
Nevenca Zoranca Doca (born 1972) graduated in 1995 from the University of Bucharest,
Faculty of Biology, specialized on Medical Biology, and in 1996 she completed the program
of master studies, specialized on Neurobiology - Human Behaviour, from the Faculty of
Biology, University of Bucharest. She started her professional activity within the company
Italoromedica in 1995, as a Supervisor on Quality Assurance and Control, and starting from
1998, she worked for ABN AMRO Bank as Human Resources Assistant, Human Resources
Officer, and Human Resources Manager at national level. She joined the team of Banca
Transilvania starting from 2002 as Human Resources Manager, and since February 2009 she
has occupied the position of Executive Manager - Human Resources.
There is no potential conflict between the responsibilities of the members of the Board of
Directors and the Executive Management Committee of the Bank and their personal interests
and/or other responsibilities.
10. THE FUNCTIONING OF THE ADMINISTRATION AND MANAGEMENT
BODIES
Audit Committee
In accordance with the applicable legal provisions and in order to carry out the duties
regarding the internal audit, the Board of Directors decided to set up an Audit Committee,
formed by members of the Board of Directors who do not hold management positions. At
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present, the Audit Committee consists of the following non-executive directors:
- Peter Franklin
- Retegan Carmen
- Roberto Marzanati
The Audit Committee is headed by a President elected by its members. It meets whenever
required and related discussions are written down.
The following persons may be invited at the Audit Committee meetings: Internal Audit
Manager, Financial Auditor, external consultants or other relevant persons.
The Committee preapproves all the audit services as well as the authorized services provided
by the external auditor.
The Audit Committee has the following responsibilities entrusted by the Board of Directors,
according to the activity:
Financial statements
• Examining significant accounting aspects, reporting and understanding their impact on
the financial statements; such aspects include:
-Important matters concerning the accounting principles and the presentation
of financial statements, including any significant changes of the Bank’s
decision regarding the choice or the application of the accounting principles;
• Examining the analysis prepared by the management and/or by the financial auditor,
containing significant reporting aspects and statements in relation to the preparation of
the financial statements, including analysis of the effects of the alternative GAAP
methods on the financial statements;
Internal Control
• Understanding the purpose of examination of the financial statements by the external
and internal audit and obtaining reports and recommendations in relation to the
identified issues, along with the management responses (best practice);
Internal Audit
• Examination - together with the management and the Internal Audit Manager - of
operations, audit plans, activities, personnel and structure of the internal audit
function;
External Audit
• Examination of the proposals made by the external auditor regarding the audit
purpose and approach method, including the coordination between external and
internal audit;
• Ensuring the external auditor's independence, in accordance with the requirements of
Audit International Standards;
• Organising regular meetings with the external auditor in order to discuss issues that
should be treated in private, according to the opinion of the committee or of the
auditors.
Reports
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•
Providing means of open communication between the internal audit, the external audit
and the Board of Directors;
Other responsibilities
• Examination and annual assessment of compliance with the Committee’s rules of
organization, requesting the Board of Directors’ approval for any proposed changes
and ensuring appropriate communication in accordance with the applicable legal
provisions.
• Providing an annual confirmation that all the responsibilities referred to in these Rules
of organization and functioning have been properly carried out;
• Monitoring internal auditors and financial auditors;
• Proposal/appointment/revocation, as follows:
o Recommendation addressed to the Remuneration Committee for the
approval/dismissal of the Internal Audit Manager, for establishing the
remuneration and the variable part of the salary (including annual performance
incentives) as well as the activity evaluation system.
o The approval/dismissal proposal regarding the financial auditor (external),
including the remuneration proposal is addressed to the bodies with
supervision attributions;
• Reviewing and approving the activity coverage of internal audit and financial audit
(external), the audit assignment frequency and the annual audit plan;
• Reviewing audit reports and establishing (as appropriate) the measures to be adopted
by the executive management and ensuring that the bodies with management
responsibilities adopt and implement the necessary measures in order to solve the
deficiencies identified during the control and compliance activity, as well as other
issues identified by the auditors.
Remuneration Committee:
It is a body under the authority of the Board of Directors, established with the purpose to
deliver competent and independent opinions regarding the remuneration policies and
practices.
The composition of the Remuneration Committee is:
- The Chairman of the Board of Directors
- 2 Members of the Board of Directors.
It analyses and ensures that the policies and the general principles of remuneration, as well as
staff benefits are in line with Banca Transilvania’ business strategy, its long term objectives,
values and interests.
The Remuneration Committee meets at least twice a year, or whenever it is necessary, upon
the request of one of its members or of the Bank’s management.
Executive Management Committee (EMC):
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EMC members are responsible for the Bank’s management in such a manner so as to meet
business practice requirements and to the best interest of the Bank, by taking into account the
shareholders’ return, the image of the Bank and the public interest. Key principles of activity
are transparency, honesty, prudence and profit maximisation.
EMC members are jointly and individually responsible before the Board of Directors for the
exercise of assigned duties.
EMC consists of 11 members: the General Manager, the Deputy General Manager and 9
Executive Managers: Operations Manager (COO), Corporate and SME Manager
(CC&SMEs), Retail Banking Manager (RB), Regional Manager Bucharest (DEB), Regional
Manager Oradea (DEO), Risk Manager, Deputy CEO 2, Financial Institutions and
International Relations Manager, Human Resources Manager.
EMC decisions are communicated by the EMC secretary to the specialised departments,
technical committees in the Headquarters and branches, by indicating the deadlines and the
tasks to be accomplished.
Committee for the Review of Internal Rules:
The Committee has the following composition:
- A non-executive member of the Board of Directors ;
- General Manager;
- Deputy General Manager.
The Committee submits to the Board of Directors a summary of amendments or new rules
proposed for approval.
The Board of Directors will ensure that the implementation of internal rules is observed at the
level of the Management Committee, on the basis of specific indicators and of half-year
reports highlighting the results of such implementation.
Technical Committee for the Management of Banking Risks (CTARB):
The Committee is appointed by the EMC and consists of 7 members: General Manager,
Deputy General Manager, Operations Manager (COO), Regional Executive Manager
Bucharest (DEB), Regional Executive Manager Oradea (DEO), Risk Manager (Executive
Secretary of the Technical Committee), Deputy CEO 2.
The Technical Committee for the Management of Banking Risks exercises the risk
management function as a collective body; its members exercise a part of the specific rights
related to risk management in their field of activity. The Technical Committee for the
Management of Banking Risks meets every month or whenever the situation requires in order
to analyse the reports/materials in which the Bank’s specialized departments present special
events or the evolution of certain indicators which are different from the policies, the
forecasting and the indicators established by the Bank as being relevant for the normal course
of activity (with reference to the pre-determined limits) and to take the appropriate decisions.
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Technical Committee for the Management of Assets and Liabilities (ALCO):
The Committee is appointed by EMC and has the following structure: General Manager;
Deputy General Manager; Operations Manager (COO), Risk Manager, Retail Manager;
Corporate and SME Manager, Financial Institutions and International Relations Manager,
Deputy CEO 2 (Executive Secretary of the Technical Committee).
The Financial Manager and the Manager of Budget and Planning Department have the quality
of permanent guests.
The Technical Committee for the Management of Assets and Liabilities receives information
and reports from the specialized departments. The committee examines the documentation
and makes decisions concerning the management of interest rate risk, currency risk, liquidity
risk and price risk, for the purpose to ensure the appropriate management of the Bank’s assets
and liabilities. The decisions contain specific deadlines and responsibilities.
Technical Committee for Audit, Compliance and Internal Control (CTACCI):
The Technical Committee for Audit, Compliance and Internal Control consist of 5 members:
Deputy General Manager (coordinator of the internal control system - executive secretary of
the committee); General Manager; Risk Manager; Regional Executive Manager Oradea
(DEO); Regional Executive Manager Bucharest (DEB).
The decisions of the Committee are adopted by half plus one of the members which form the
committee. The Technical Committee for Audit, Compliance and Internal Control examines
the acts of control of the Internal Audit Department, the Department for Risk Credit
Inspection, the Compliance Department, the Electronic Channels Division, of the Department
for Operational Risk Management and of other departments in charge with internal control
and make decisions to remedy the identified deficiencies.
Technical Committee for the Approval of Internal Rules (CTARI):
The composition of the Technical Committee for the Approval of Internal Rules is the
following: Deputy General Manager (Executive Secretary of the Technical Committee);
Executive Manager (COO); Executive Manager (CC&SMES); Executive Manager (RB);
Executive Manager (Risk Management).
The committee receives the documentation for endorsement/approval of internal rules and
examines its contents. It ensures the compliance with the internal rules in accordance with the
legal provisions in force.
Technical Committee for Operational Risk (CTRO):
The Technical Committee for Operational Risk focuses mainly on risk management in
operations and its membership is the following: General Manager, Deputy General Manager,
Executive Manager (COO) (executive secretary of the Technical Committee); Executive
Manager - Risk Management.
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The Technical Committee for Operational Risk receives information and reports from the
specialized departments in the Head Office and branches, it analyses the documentation and
makes decisions concerning operational risk or submits proposals to other Technical
Committees under the supervision of the Executive Management Committee or to the
Executive Management Committee based on competence.
It communicates the measures to be implemented by departments in the Head Office/branches
and monitors their implementation within the established deadlines.
Technical Committee for Credit Policy and Approval (CTPAC):
The main objective is to establish BT’s lending policy and to approve loans with value or
conditions exceeding the competence of other departments or persons within the Bank. The
Technical Committee for credit policy and approval has the following members: General
Manager; Deputy General Manager; Executive Manager – Corporate & SME Clients (for
legal persons) - executive secretary of the technical committee; Regional Executive Manager
(for natural persons); Executive Manager – Risk Management; Executive Manager – COO;
Regional Executive Manager (DEB); Regional Executive Manager (DEO).
Technical Committee for Human Resources (CTRU):
The Technical Committee for Human Resources was created in order to increase efficiency
and focus in making decisions regarding BT employees. The Technical Committee for
Human Resources is composed of: General Manager; Deputy General Manager; Executive
Manager (COO); Executive Manager - Retail Banking; Executive Manager - Corporate and
SME Clients; Regional Executive Manager Bucharest (DEB); Executive Manager - Human
Resources - executive secretary of the technical committee; Status of attendees: Deputy
Manager for Human Resources, Deputy Manager for Human Resources (Bucharest) and a
representative of the employees.
Credit and Risk Committees in the Head Office (CCR1 and CCR2):
The main objective of the Credit and Risk Committees in the Head Office is to analyse and to
approve loans, respectively to restructure loans according to the competences granted by the
Executive Management Committee.
The Technical Committee for credit policy and approval mandates CCR1 and CCR2 with the
capacity to approve loans (the competence is set in specific internal regulations).
Membership of the Credit and Risk Committee 1 (CCR 1)
The members of the Credit and Risk Committee 1 (CCR 1) are:
- deputy manager of DMRC/coordinator of risk analysts / designated substitutes;
- management of the Corporate Client Credit Department, SME Department, Healthcare
Division and Retail Credit Department, within the HO
- Heads of Services within the Corporate Client Credit Department/ Manager of the Corporate
Client Credit Department/designated substitute; SME Clients Department Manager/ deputy
78
manager for SME loans/ designated substitute for SME clients; deputy manager of the
Healthcare Credit division/ designated substitute for Healthcare division clients; Deputy
manager for retail loans/ designated substitute for retail clients; legal advisor / designated
substitute.
Membership of the Credit and Risk Committee 2 (CCR 2):
- deputy general manager / designated substitute
- manager for Risk Management, deputy manager of DMRC/designated substitute
- management of the Corporate Client Credit Department, SME Department, Healthcare
Division and Retail Credit department within the HO: Manager of Corporate Client Credit
Department/designated substitute; SME Department Manager/ deputy manager for SME
loans/designated substitute for SME clients; deputy manager of the Healthcare Credit
division/ designated substitute for Healthcare division clients; Deputy manager for retail
loans/ designated substitute for retail clients; legal advisor / designated substitute.
It analyses and approves the loan requests of the branches in RON and foreign currency,
which fall under their competence, based on the information contained in the loan reports/
Credit risk assessment forms.
Credit and Risk Committee in branches/agencies (CCRS/CCRA);
The main objective of the Credit and Risk Committees in branches/agencies is to analyse and
approve loans, respectively to restructure loans according to the competencies granted by the
EMC.
The membership of the Credit and Risk Committee is established to cover staff size and
structure in BT branches.
There are 3 types of credit and risk committees at branch level:
a. Credit and Risk Committee approving loans to Corporate clients – no. of members: at
least 3 persons.
b. Credit and Risk Committee approving loans to SMEs, family associations or
authorized natural persons – no. of members: 3 persons.
c. Credit and Risk Committee approving loans to natural persons.
CCR members are:
- Branch manager/ Deputy branch manager;
- Head of retail/ retail coordinator/ head of retail loans;
- Credit analyst/ client advisor / head of agency (for the documentation related to the
coordinated agency);
- Legal advisor (specialized consultant, at the request of the Credit and Risk Committee
without voting right).
Membership of the Credit and Risk Committee in Agencies:
79
The structure of the Credit and Risk Committee at agency level, both for natural persons and
legal persons, is the following:
- Head of agency;
- SME advisor (credit analyst) / retail advisor.
The decision to grant lending competences is valid as long as the head of agency is present;
otherwise the credit documentation is submitted for approval to the Credit and Risk
Committee of the Branch.
The SME advisor and the Retail Banking advisor may replace one another, when one of them
is missing.
Cost Control Committee (CMC):
The Cost Control Committee has been created at the initiative of the Executive Management
Committee. The membership of the Cost Control Committee is the following: chairman:
Financial Manager; members: General Manager; Executive Manager (COO); Head of the
Office for Financial Analysis; Manager of Investments and Logistic department (in position
of executive secretary of the committee).
The committee meets at least once a month or whenever it is necessary.
The committee has the following responsibilities: examination of effective operating costs per
components, with focus on the segments incurring the highest expenses, identification of
causes for unjustified costs, making proposals and decisions for cost reduction.
Operations Steering Committee (OSC)
OSC is responsible for coordinating, recommending and reviewing changes in various
operational areas in order to streamline BT’s activity.
The committee members are: General Manager, Deputy General Manager, Executive
Manager - COO, Executive Manager - Retail Banking, Executive Manager - Corporate and
SME clients/ Business Banking Manager, Project Management and IT managers.
Any department manager within BT Head Office may attend the meetings of OSC.
. Mr. Nicolae Tarcea as legal representative of Banca Transilvania, I declare that Banca
Transilvania fulfils the corporate governance regime in force in Romania.
80
11. MAIN SHAREHOLDERS
As at 30.12.2012, the shareholder structure was the following:
No. of persons
No. of Shares
Percentage %
ROMANIAN CAPITAL
25,956
939,705,008
49.38
Natural persons
25,308
438,899,234
Legal persons
648
500,805,774
23.06
26.32
FOREIGN CAPITAL
770
963,337,405
50.62
Natural persons
641
54,140,207
2.84
Legal persons
129
909,197,198
47.78
26,726
1,903,042,413
100
TOTAL
Shareholders’ Register as at 30.12.2012.
Significant Shareholders
The EBRD is the only shareholder owning more than 10% of the Bank’s share capital,
notably 278.100.206 Shares representing 14.6134%. The EBRD is an international financial
institution owned by 63 countries, the European Community and the European Investment
Bank.
A description of the agreements known by the Issuer, which may generate at a later date
a change of control over the Issuer.
Not applicable.
12. FINANCIAL INFORMATION ON THE ASSETS, FINANCIAL STATEMENTS
AND REPORTS OF THE ISSUER
12.1.Historical financial information
Banca Transilvania is part of the Banca Transilvania Financial Group, which includes the
parent-Bank and its subsidiaries headquartered in Romania and in the Republic of Moldova.
The Group’s financial statements for the fiscal year ended 31 December 2011, 31 December
81
2010 and 31 December 2009 consist of the financial statements of Banca Transilvania S.A.
and those of its subsidiaries, which together form the Group. The subsidiaries include the
following entities:
Subsidiary
Field of activity
31
December
2011
BT Securities S.A.
Investments
95,50%
BT Leasing Transilvania IFN S.A.
Leasing
100,00%
BT Investments S.R.L.
Investment
100,00%
BT Direct IFN S.A.
Other lending activities (consumer
100,00%
loan)
BT Building S.R.L.
Investments
100,00%
BT Asset Management S.A.I. S.A.
Asset Management
80,00%
Insurance and Pension Houses
BT Solution Agent de Asigurare S.R.L.
95,00%
Related Activities
BT Asiom Agent de Asigurare S.R.L.
95,00%
Related Activities
BT Safe Agent de Asigurare S.R.L.
99,98%
Related Activities
BT Intermedieri Agent de Asigurare
99,99%
Related Activities
S.R.L.
BT Account Agent de Asigurare S.R.L.
Investments
100,00%
BT Compania de Factoring S.R.L.
Factoring
100,00%
BT Finop Leasing S.A.
Leasing
51,00%
BT Consultant S.R.L
Financial Brokerage
100,00%
BT Evaluator S.R.L.
Financial Brokerage
100,00%
Medical Leasing IFN S.A.
Leasing
100,00%
Rent-a- Med S.R.L.
Rental of medical equipment
100,00%
BT Leasing MD S.R.L.
Leasing
100,00%
BT Transilvania Imagistica S.A.
Other activities related to human
91,43%
health
For the year ended 31 December
2011
thousand
82
2010
thousand Lei
2009
thousand
Lei
1.856.372
-921.954
934.418
436.026
-53.868
382.158
111.613
61.524
1.489.713
-315.849
Lei
2.109.440
-1.355.111
754.329
417.098
-46.293
370.805
143.201
48.316
1.316.651
-490.784
Interest income
1.894.260
Interest expenses
-897.963
Net interest income
996.297
421.645
-46.735
374.910
Net trading income
118.969
51.719
Operating income
1.541.895
Net impairment losses on assets, other
-646.965
liabilities and credit commitments
Staff expenses
-390.262
-373.371
-348.999
Depreciation expenses
-63.787
-60.897
-68.042
-364.386
-306.888
-299.957
Operating expenses
-1.134.284
-1.388.121
-1.207.782
Share of profits/(losses) in associates
0
4.741
10.298
Profit from the sale of associates and
38.596
jointly controlled companies
Profit before tax
355.429
158.515
157.763
Income Tax expense
-58.181
-24.531
-21.048
Profit for the year
297.248
133.984
136.715
Profit for the year attributable to:
297.019
133.794
138.323
229
190
-1.608
Profit for the year
297.248
133.984
136.715
0,1840 0,0801/0,0978
0,1038
0,1840
0,0801
0,1038
The financial statements included in the Consolidated Profit and Loss Account for the
financial year ended 31st December table, have been audited
Consolidated statement of comprehensive income
For year ended 31 December
2011
thousand
Lei
297.248
Profit for the year
Other comprehensive income, net of
income tax
83
2010
2009
thousand Lei thousand
Lei
133.984
136.715
Fair values gains/(losses) from
available for sale investments (net of
deferred tax)
Other elements of comprehensive
income, net of tax
Revaluation reserve for fixed assets
Total comprehensive income for the
period
Total comprehensive income
attributable to:
period
-15.820
7.263
44.405
20.906
5.494
2.950
302.334
6.116
152.857
184.070
302.127
207
302.334
153.024
-167
152.857
186.692
-2.622
184.070
The financial statements included in the Consolidated statement of comprehensive income
for the financial year ended 31st December table, have been audited.
2011
thousand Lei
Assets
Financial assets at fair value through
profit and loss
Available for sale securities
Held to maturity securities
Intangible assets
Goodwill
Deferred tax assets
Other assets
Total assets
2010
thousand
Lei
2009
thousand
Lei
4.550.256
778.977
140.551
3.701.125
1.237.155
111.977
3.186.997
1.535.915
44.865
13.977.655
207.388
5.816.778
819
297.531
70.555
376
28.163
139.764
26.008.813
12.215.792
223.617
3.780.997
820
287.570
48.875
8.369
30.454
83.501
21.730.252
11.481.759
271.312
2.573.466
11.654
42.404
305.000
12.389
8.369
16.719
122.181
19.613.030
84
Liabilities
Deposits from banks
Loans from banks and other financial
institutions
Securities
Other liabilities
Total liabilities
Equity
Share capital
Treasury shares
Share premiums
Retained earnings
Revaluation reserve
Other reserves
Total equity attributable to equity
holders of the Bank
Total equity
251.181
20.257.251
2.592.982
333.194
17.279.132
1.593.295
259.134
14.989.199
2.160.404
260.148
255.384
23.616.946
257.553
0
177.114
19.640.288
253.665
1.262
111.332
17.774.996
1.860.159
-2.118
732
303.268
35.544
192.248
2.389.833
1.560.500
-256
0
301.088
28.291
198.230
2.087.853
1.176.237
-333
97.684
354.157
22.543
179.948
1.830.236
2.034
2.391.867
26.008.813
2.111
2.089.964
21.730.252
7.798
1.838.034
19.613.030
The financial statements included in the Consolidated statement of financial position for the
financial year ended 31st December table, have been audited.
85
Consolidated statement of changes in equity
Attributable to equity holders of the Bank
In thousand Lei
Share
Own
Share
Revaluatio Other
Retaine
capital
shares premiu n reserves reserve
d
m
s
earnings
1.560.50
-256
28.291 198.23 301.088
Balance as at December 31, 2010
0
0
period
Profit for the year
297.019
Other comprehensive income, net
of income tax
Transfer from revaluation surplus to
-1.080
1.080
retained earnings
Fair values losses from available for
-15.820
sale investments (net of deferred tax)
Other changes
-3.398
8.333
15.971
-3.398
7.253 -15.820 314.070
period
Increase in share capital through
302.336
-302.336
conversion of reserves from the
statutory profit
Increase in share premium
732
Increase in share capital through cash
721
86
Noncontrollin
g interest
2.111
229
Total
2.089.96
4
297.248
-15.820
-22
207
20.884
302.312
732
721
contribution
Distribution to statutory reserves
Acquisition of own shares
Acquisition
of
non-controlling
interest
Contributions by and distributions
to owners
period
Profit for the year
Other comprehensive income, net
of income tax
Transfer from revaluation surplus to
retained earnings
Fair values gains from available for
sale investments (net of deferred tax)
Other changes
period
conversion of reserves from the profit
9.838
-9.838
-1.862
-1.862
284
-284
303.057
-1.862
732
-
9.838
-311.890
-284
-409
1.860.15
9
-2.118
732
35.544
192.24
8
303.268
2.034
2.391.86
7
1.176.23
7
-333
97.684
22.543
179.94
8
354.157
7.798
1.838.03
4
133.794
190
133.984
-368
368
7.263
7.263
3.748
11.011
6.116
5.137
152.500
6.116
5.748
173.901
97.684
1.746
135.908
-173.901
-97.684
87
-357
-167
incorporation of share premium
Increase in share capital through cash
contribution
Distribution to statutory reserves
Acquisition of own shares
Acquisition
of
non-controlling
interest
Contributions by and distributions
to owners
112.678
-
-
-
-
7.271
-7.271
77
384.263
77
-97.684
-
7.271
112.678
-7.805
-5.520
77
-13.325
-188.977
-5.520
99.430
1.560.50
-256
28.291 198.23 301.088
2.111 2.089.96
0
0
4
st
The financial statements included in the Consolidated statement of the equity evolution for the financial year ended 31 December table,
have been audited.
88
Consolidated cash flow statement
2011
thousand Lei
Cash
flow
from/(used
in)
operating activities
Profit for the year
Adjustments for:
Impairments and write-offs of
financial assets
Share of profit in associate, net of
dividends
Fair value adjustment of financial
assets at fair value through profit and
loss
Profit from the sale of affiliated
entities and jointly controlled
companies
Income tax expense
Other adjustments
Net profit adjusted for non-cash
items
Changes in operating assets and
liabilities
Change in investment securities
Change in placement with banks
Change in loans and advances to
customers
Change in net lease investment
Change in financial assets at fair
value through profit or loss
Change in other assets
Change in deposits from customers
Change in deposits from banks
Change in other liabilities
Income tax paid
2010
thousand
Lei
2009
thousand Lei
297.248
133.984
136.715
63.787
349.593
60.897
647.505
68.042
490.784
-
1.805
10.298
-9.247
-2.420
-17.203
-
-
-38.596
56.190
-46.366
40.361
-143.655
21.048
-85.769
711.205
738.477
585.319
-1.993.463
18.935
-2.017.414
-1.238.340
-4.717
-1.234.489
-1.702.780
-101.705
-1.034.093
32.596
-35.810
22.817
-64.692
104.893
-13.140
-80.743
2.950.057
-81.493
61.601
-51.009
-17.647
2.302.439
74.167
23.277
13.057
-51.168
3.114.883
-5.918
-82.943
89
Net cash from/(used in) operating
-485.538
614.349
813.348
activities
Cash flow from/(used in) investing
activities
Net acquisitions of property and
-82.339
-52.879
-24.138
equipment and intangible assets
Net cash receipts from the sale of the
44.693
entities affiliated to the jointly
controlled companies
Acquisition of subsidiaries (net of
-13.325
-24.039
cash acquired) and investments in
associates
Dividends collected
817
932
2.017
-81.522
-65.272
-1.467
Net cash flow from/(used in)
investing activities
Cash flow from /(used in)
financing activities
Proceeds from increase of share
1.453
112.678
capital
Net proceeds/(payments) from loans
986.945
-590.975
-681.477
from banks and other financial
institutions, subordinated liabilities
and debt securities issued
Payments for dividends
-48.793
-1.862
76
Proceeds/(payments) for own shares
-12.297
1
10.300
Proceeds from investments held to
maturity
Net cash flow from/ (used in)
986.537
-467.921
-742.567
financing activities
Net increase in cash and cash
419.477
81.156
69.314
equivalents
Cash and cash equivalents at 1
4.613.120
4.531.964
4.462.650
January
Cash and cash items at 31
5.032.597
4.613.120
4.531.964
December
Reconciliation of cash and cash equivalents with the consolidated statement of
financial position
4.550.256
3.701.125
3.186.997
Placements with other banks – less
484.360
915.583
1.349.220
than 3 months maturity
90
Less accrued interest
-2.019
Cash and cash equivalents in the
5.032.597
cash flow statement
Cash flows from operating activities include
Interest collected
1.852.095
Paid interest
880.055
-3.588
4.613.120
-4.253
4.531.964
1.869.447
907.514
2.066.742
1.377.312
The financial statements included in the Consolidated statement of cash flows for the financial
year ended 31st December table, have been audited.
12.2. Audit of the annual financial information
Financial Auditor
The Bank's auditor is KPMG Audit S.R.L, with head office on DN1, Soseaua Bucuresti-Ploiesti
nr.69-71, Sector 1, Victoria Business Park, Bucharest, 013685, recorded with the Trade Register
Office under number J40/4439/2000, recorded with the Chamber of Financial Auditors of
Romania under no. 9/2001.
According to the report of KPMG Audit S.R.L. to the shareholders of the Bank for the years
2011, 2010 and 2009, “the accompanying consolidated financial statements of Banca Transilvania
S.A. and of its subsidiaries fairly present, in all significant aspects, the consolidated financial
position of the Group as at December 31, 2011, 2010, 2009 as well as the consolidated results of
its operations and the consolidated cash flows for the financial year then ended, in accordance
with the International Financial Reporting Standards adopted by the European Union”.
12.3. Interim financial information and other information
Banca Transilvania Individual Financial Statements, 3rd Quarter of 2012
Individual Profit and Loss Account
For Q3 2012
Interest income
Interest expense
Net interest income
Q3 2012
Thousand Lei
1.506.577
(798.066)
708.511
91
Q3 2011
Thousand Lei
1.341.881
(694.540)
647.341
Q3 2012/
Q3 2011 %
1,12
1,15
1,09
Net trading income
Operating income
Personnel expenses
Operating expenses
Operating profit
Net impairment losses on assets,
other
liabilities
and
credit
commitments
Profit before tax
Tax expense
Net profit
358.371
(44.125)
314.246
100.912
33.867
1.157.536
(313.382)
(35.055)
(268.534)
(616.971)
540.565
(265.737)
322.686
(36.345)
286.341
73.345
14.761
1.021.788
(278.044)
(36.927)
(233.369)
(548.340)
473.448
(219.460)
1,11
1,21
1,10
1,38
2,29
1,13
1,13
0,95
1,15
1,13
1,14
1,21
274.828
(9.396)
265.432
253.988
(49.472)
204.516
1,08
0,19
1,30
The financial statements included in the Individual Profit and Loss Account for the financial Q3
2012 table, have not been audited
Individual statement of financial position
For Q3 2012
Assets
Loans and receivables
Loans and advances to customers net
sale
maturity
Intangible assets
Q3 2012
Thousand Lei
Dec 31. 2011
Thousand Lei
Dec 31, 2012/
Q3 2011 %
4.558.295
1.059.394
77.593
38.734
4.546.532
566.608
202.819
119.521
1,00
1,87
0,38
0,32
15.526.590
14.035.290
1,11
7.171.962
5.813.219
1,23
0
819
-
74.053
74.004
69.978
69.136
1,06
1,07
92
Tangible assets
Receivables related to deferred tax
Other assets
Total assets
Liabilities
Deposits from banks
Other liabilities
Total liabilities
Equity
Share capital
Treasury shares
Share premiums
Retained earnings
Revaluation reserve
Other reserves
Total equity
275.174
16.683
137.491
29.009.973
266.586
26.974
100.364
25.817.846
1,03
0,62
1,37
1,12
265.800
22.833.173
2.671.711
251.181
20.280.230
2.468.988
1,06
1,13
1,08
276.095
324.251
26.371.030
260.148
237.495
237.495
1,06
1,37
1,12
1.989.543
-1.997
0
369.283
33.548
248.566
2.638.943
29.009.973
1.860.159
-1.907
732
234.983
34.134
191.700
2.319.804
25.817.846
1,07
1,05
1,57
0,98
1,30
1,14
1,12
The financial statements included in the Individual statement of financial position for the
financial Q3 2012 table, have not been audited,
The financial statements presented in the Prospectus on 30. 09. 2012 have not been audited.
12.4. Legal and arbitration procedures
Not applicable.
12.5. Significant changes in the financial or commercial situation
Not applicable.
13. ADDITIONAL INFORMATION
13.1. Share capital
The Bank is registered with the Trade Register (TRO) under number J12/4155/16.12.1993, having
the Tax identification number 5022670. According to the updated Articles of Association, the
Bank has a share capital of 1,903,042,413 Lei divided into 1,903,042,413 shares, each with a
nominal value of 1 Leu. The share capital is fully subscribed and paid on the registration date of
the mentions regarding the latest increase of capital with the TRO.
93
The Shares of the Bank are nominative, dematerialised, registered with the Central Depositary.
The Shares bear dividend calculated based on the annual profit of the Bank. Any capital increase
and issuance of new Shares can occur after the full payment of Shares from the previous issuance.
According to the Articles of Association and the applicable regulations, each share acquired in
accordance with the law grants the shareholder several rights attached to the Shares held,
including:
• the right to attend and vote in the GSM and Extraordinary GSM;
• the right to dividends;
• the right of preference associated to the capital increase operation, which gives
shareholders the right of priority in subscribing to the newly issued Shares and protects the
holders of Shares against the risk of dilution of the share capital percentage held before the
capital increase;
• the pre-emption right applies to issuance of Bonds convertible to Shares;
• the right to participate in the distribution of the proprietary assets upon liquidation of the
Issuer; the right to elect and be elected in the governing bodies of the Issuer;
• right to the allocation of Shares free of charge in case of share capital increase from
internal resources;
• the right to information;
• the right to appeal in court the decisions of the GSM or of the Board of Directors adopted
under the delegation of authority;
• the right to withdraw from the company, in strictly defined cases;
• the right to report to internal auditors any facts which should be examined, in the
shareholder’s opinion;
No shareholder can hold 10% or more of the total share capital of the Bank, unless:
(i) it is approved by the General Meeting of the Shareholders; and
(ii) it is in accordance with all the requirements of banking legislation.
Each shareholder must comply with the Articles of Association and shall be bound by the valid
decisions of the General Meeting of Shareholders. All Shares confer equal rights and obligations.
The shareholders are liable up to the subscribed share capital.
The Shares are indivisible. If a share becomes the property of several persons, the Bank may
refuse to register the transfer of the share until the respective persons shall not appoint a sole
representative to exercise the rights derived from the share. As long as a share is divided between
several persons, these are jointly liable for the completion of all relevant payments.
13.2. Memorandum and Articles of Association
94
According to the Articles of Association, the main object of activity is: financial intermediation
and insurance, financial intermediation, except that of insurance activities and pension funding,
monetary intermediation and other monetary intermediation activities. The Bank shall perform
specific operations and activities in the country and abroad, on its own or on behalf of its clients,
legal or natural entities, on behalf of institutions or in collaboration with these.
14.IMPORTANT AGREEMENTS
Except for the agreements concluded during the ordinary course of the banking activity
performed by the Issuer, the Bank did not conclude any agreements that could have affected
the Issuer’s capacity to fulfil its obligations to the investors.
15. THIRD PARTY INFORMATION,
DECLARATIONS OF INTEREST
STATEMENTS
BY
EXPERTS
AND
KPMG Audit S.R.L, with head office on DN1, Soseaua Bucuresti-Ploiesti nr.69-71, Sector 1,
Victoria Business Park, Bucharest, 013685 recorded with the Trade Register under number
J40/4439/2000, recorded with the Chamber of Financial Auditors of Romania under no. 9/2001
has audited the Group’s financial statements for the fiscal year ended 31 December 2011, 31
December 2010 and 31 December 2009. These financial statements together with the audit report
are attached as Annex to this Prospectus.
95
16. DOCUMENTS ON PUBLIC DISPLAY
Throughout the Offer validity period the following documents are available to investors:
(a) the Issuer’s Articles of Association;
(b) all reports, letters and other documents, historical financial information, valuations and
statements prepared by experts at the request of the Issuer from which certain parts are included
or referred to in the registration document;
(c) the historical financial information of the Issuer or, in case of a group, the consolidated
financial information of the two financial years that precede the publication of the registration
document.
The documents mentioned above are available for consultation, on paper support, at any of the
following addresses:
•
•
the headquarters of the Broker (Cluj Napoca, Bld. 21 Decembrie 1989, nr.104, et 1)
the headquarters of the Issuer (Cluj-Napoca, G. Baritiu Str. No.8, 2nd floor)
96
II. BONDS TERMS AND CONDITIONS
1.
BASIC INFORMATION
1.1. Interests of the individuals and legal entities involved in the offer
The Bank and the Broker hereby declare that none of them has any interest that may
significantly influence the Offer, except for those related to the execution and performance of
the Bond Agreements and the Prospectus.
The Issuer represents to investors that the only persons responsible for drawing the Prospectus
are the Bank and Broker and no other person is involved or accepts liability for the Prospectus.
1.2. Reasons for the offer and use of funds
The funds obtained from the Offer in a maximum value of Euro 30,000,000 shall be used to
increase the Bank's Supplementary Tier II Capital base (own funds of the Bank) and finance the
general operations of the Bank and the expansion of the Bank's operations, including its branch
network.
2.
INFORMATION REGARDING SECURITIES THAT ARE TO BE OFFERED
2.1. The nature and category of securities offered and admitted to trading and the ISIN
code (International Securities Identification Number) or any other identifier.
The Bonds are nominative, corporate Bonds, issued in dematerialized form, evidenced by book
entry in the Bond Registry kept with the Central Depositary.
The Bonds shall be registered with CNVM and bear an ISIN Code.
Bonds are issued in Euro and shall not be admitted to trading.
2.2. The legislation underlying the creation of the securities.
The Bonds are issued and offered in accordance with the Romanian laws, i.e. Capital Market
Law and related secondary legislation issued by CNVM and the Company Law.
Any dispute that arises from or in relation with the Bonds shall be settled by the competent
authorities in Romania.
2.3. Bond form
Form and Denomination.
The Bonds are corporate securities, issued in nominative,
dematerialised form and will be kept with the Central Depositary. The Bonds will be issued in an
aggregate nominal value of Euro 30,000,000, consisting of 50,000,000 Bonds with a nominal
value of Euro 0.6 each.
97
The Bonds are securities which will not be admitted to trading, nominative, convertible into
Shares of the Issuer, representing unsecured and subordinated indebtedness qualifying as
supplementary Tier 2 capital of the Issuer in accordance with Regulation 18/2006
Title and Transfers. The Title to the Bonds belongs to the holders of the Bonds registered in
the Bond Registry kept with the Registrar. The title to the Bonds shall pass to the transferee
upon the registration of such transaction in the Bond Registry, in accordance with the civil and
commercial laws in force in Romania.
Each person who appears in the Bond Register as the holder of such Bonds (in which regard any
certificate or other document issued by the Registrar and confirming the nominal amount of such
Bonds registered on the account of any person shall be conclusive and binding for all purposes
save in the event of manifest error) shall be deemed to be (and shall be treated by the Bank, the
Paying Agent and all other agents of the Bank as) the holder of such Bonds. .
2.4. The currency of the issuance
Bonds are issued in Euros.
2.5. Classification of the securities offered and admitted to trading, including a summary of
any clauses that are intended to influence the classification or to subordinate the securities
in question to any other current or future commitment of the Issuer.
The issuance in 2013 of the unsecured, convertible and subordinated Bonds amounting to Euro
30,000,000, due in 2020 was authorized by the resolutions of the Extraordinary General Meeting
of the Shareholders, adopted on April 27, 2012 and on October 30, 2012.
The Bonds are securities which will not be admitted to trading, nominative, convertible into
Shares of the Issuer, representing unsecured and subordinated indebtedness qualifying as
supplementary Tier 2 capital of the Issuer in accordance with Regulation 18/2006.
2.6. A description of the rights related to securities, including any restrictions that are
applicable, as well as of the procedures for the exercise of the rights in question.
The Bondholders have the rights provided by the relevant legislation as well as by this
Prospectus and by the relevant Bond Agreements with respect to, amongst others, interest
payment, conversion rights, their rights to convene Bondholders meetings, to benefit of Payment
Agent services, to be provided with certain information.
98
The Bonds are direct, unconditional, general and unsecured obligations of the Bank ranking pari
passu among themselves and without any preference, but the Bonds shall be subordinated and
junior in right of payment to the non-subordinated claims of all other creditors, but shall rank
pari passu with any subordinated debts of the Issuer; provided that, such subordination
provisions shall not prevent any holder of the Bonds from exercising the conversion rights under
the Bonds set forth in the Prospectus, and no deemed payment of any Bond arising out of any
exercise of conversion rights shall be prohibited by such subordination provisions.
Relevant details regarding specific rights and limitations are provided in various sections of
the Prospectus. Specifically, a description of the provisions on interest, subordination,
conversion, bondholders meetings is available at Sections [2], [5] and [11] below.
Subject to the terms provided in Annex 2A], the Issuer undertakes to observe certain standards
which will increase the performance of the Bank for the benefit of the Bondholders and to
provide certain information and documents to the Bondholders. The breach of these undertakings
/standards does not constitute an Event of Default and consequently cannot trigger the
acceleration, the early repayment of the Bonds or the increase in the initial costs.
The Bonds shall not be rated and admitted to trading on a regulated market or any other trading
platform (multilateral trading facilities etc). The transfer of the Bonds shall be effected in
compliance with the provisions of the civil and commercial laws of Romania.
2.7. Nominal interest rate and provisions for payable interests:
Interest
The Bonds bear interest from the Issue Date at a rate equal EURIBOR6 month +6.25% (the sum,
the "Interest Rate"), payable semi-annually in arrears on the following dates:
15 July 2013
15 January 2014
15 July 2014
15 January 2015
15 July 2015
15 January 2016
15 July 2016
15 January 2017
15 July 2017
15 January 2018
15 July 2018
15 January 2019
15 July 2019
15 January 2020
Maturity Date
99
If any Interest Payment Date would otherwise fall on a day which is not a Business Day, the
payment of interest shall be postponed to the next day which is a Business Day. The period
beginning on the Issue Date and ending on (but excluding) the first Interest Payment Date and
each successive period beginning on (and including) an Interest Payment Date and ending on
(but excluding) the next Interest Payment Date is called an "Interest Period".
For the first Interest Period, (i) the Margin shall be 6.25% per annum and (ii) the EURIBOR6
month shall be the EURIBOR6 month in effect on the second Business Day immediately preceding
the Issue Date which can be found on the Reference Page.
For each subsequent Interest Period, on the second Business Day immediately preceding the
beginning of such Interest Period, the Paying Agent shall determine : (i) EURIBOR6 month for
such Interest Period which can be found on the Reference Page and (ii) the applicable margin,
that is 6.25%:
If, for any reason, EURIBOR 6-month cannot be determined at such times as mentioned above
by reference to the Reference Page, EURIBOR 6-month for such Interest Period shall be the
rate per annum which the Paying Agent determines to be the arithmetic mean (rounded upward,
if necessary, to four decimal places) of the offered rates per annum for deposits in Euro in an
amount comparable to the total face value of the outstanding Bonds for a period equal to such
Interest Period which are quoted by at least two major Banks active in the Euro-zone Interbank
market selected by the Paying Agent and provided further that if pursuant to the above the
Interbank Rate would be below zero, the Interbank Rate will be deemed to be zero
Return on the Bonds
The return on the Bonds, for one Bond, (periodic interest payment) will be variable
dependent on the Interest Rate, which is also variable. The return on the Bonds is
calculated for each Interest period pursuant to the following formula:
Periodic
interest
payment
=
VN
euro
(EURIBOR
6luni
+ Spread
360 days
)
× (No of days in the Interest
period
)
Where:
VNEuro = par value of a bond in EURO
The return on the Bonds for the first Interest Period ending on July 15 2013 is
EURIBOR 6 months in force on the second Business Day before the Issue Date, published
on the Reference Page plus a margin of 6.25%.
Bonds will continue to bear interest as provided herein until they are redeemed in full and all
100
payments accrued and unpaid have been paid in full or the Bonds are converted into Shares in
accordance with their terms and all payments accrued and unpaid have been paid in full.
Interest will be calculated on the basis of the actual number of days elapsed in an Interest
Period and a year of 360 days
2.8. Status, Subordination
The Bonds are direct, unconditional, general and unsecured obligations of the Bank ranking
pari passu among themselves and without any preference, but the Bonds shall be subordinated
and junior in right of payment to the non-subordinated claims of all other creditors, but shall
rank pari passu with any subordinated debts of the Issuer; provided that, such subordination
provisions shall not prevent any holder of the Bonds from exercising the conversion rights
under the Bonds set forth in Section 5. Conversion in Section 2. Information regarding
securities that are to be offered, II. Bonds Terms and Conditions below, and no deemed
payment of any Bond arising out of any exercise of conversion rights shall be prohibited by
such subordination provisions.
In the event of bankruptcy or liquidation of the Bank, all amounts due under the Bonds shall be
subordinated to the prior payment and satisfaction in full of all unsubordinated indebtedness of
the Bank admitted in such procedure. The subordination provisions shall be pursuant to the
requirements set forth by the NBR to qualify the Bonds as supplementary Tier II Capital of the
Bank (own funds of the Bank), i.e. compliant with the Regulation 18/2006.
These Bonds are capital in the form of subordinated loan, in compliance with the terms and
conditions below:
1.
the binding commitments herein ensure that, in the event of the bankruptcy or
liquidation of the Issuer, they rank after the non-subordinated claims of all other
creditors and are not to be repaid until all other unsubordinated debts outstanding at that
time have been settled. In this respect, the contractual provisions meet the general
requirements on subordinated debt, i.e.:
• subordination is effective;
• the Prospectus does not contain any clauses which may lead to the early repayment of
the Bonds or to the increase of the initial costs of the Bonds. This does not however
prejudice the Bondholder’s right to petition for the winding-up of the Issuer, in the
event of the culpable failure of the contractual obligations. The only situations that
represent culpable events of default of the Issuer (Events of Default) are: failure to
pay the due amounts according to the Prospectus (the interest pursuant to the
Prospectus and the principal upon maturity) and the Issuer’s bankruptcy, respectively.
In these situations, the Bondholder does not have any way to realize his claim other
than the possibility to request the winding up of the debtor or finally, to enforce his
rights by a liquidation procedure of the latter; additional claims for damages are
possible only within these procedures for the realization of the claims and such claims
shall be collected together with the main claim, after all other unsubordinated claims.
101
In compliance with the NBR subordination requirements (including without
limitation Regulation 18/2006), the Bondholders shall have no right to offset any
amount owed by them to the Issuer against any amount owed by the Issuer to the
Bondholders. –
2. only fully paid-up funds are taken into account;
3. the loans involved shall have an original maturity of at least five years;
4. the total amount taken into account in the determination of tier 2 supplementary own funds
will be gradually reduced during at least the last five years before the repayment date, by
applying equal semi-annual proportional shares, so that the outstanding Bonds are no longer
considered in the reporting for the last semester before the final maturity;
5. the Prospectus does not include any clause providing that, in specified circumstances, other
than the winding-up of the Issuer, the debt shall become repayable before the agreed repayment
date.
For as long as the Bonds are outstanding, the Bank shall not create or permit to be created any
mortgage, pledge or other lien or charge on any of its property or assets, as security for any
bonds, notes or other evidence of indebtedness heretofore or hereafter issued, assumed or
guaranteed by the Bank for money borrowed, but failing to observe such undertaking does not
represent an event of default in the meaning of Regulation 18/2006 and consequently cannot
trigger an early repayment, acceleration or increase in the initial costs of the Bonds".
Until the date of the first Business Day of the Primary Offer, the Bank will not make any and
will not allow the entry into force of any amendment to any of the Bond Agreements that would
adversely affect the interests of the Lead Investor in the bonds of Tranche A, and will promptly
notify the Lead Investor with respect to the termination or change of any Bond Agreement, [and
in reference to any replacement or substitution of the Paying Agent], but failure to comply does
not constitute a case of cross default, as defined by Regulation 18/2006 and, consequently,
cannot trigger a prepayment, acceleration or increase in the initial costs of the Bonds.
Until the date of the Lead Investors’ subscription in the Primary Offer, in case the Lead
Investor finds any major violation or any event which proves false or incorrect any of the
representations or warranties of the Tranche A Bonds Subscription Agreement, of the
Prospectus or any of the Bond Agreements or any other documents referring to the
aforementioned, or any failure of the Bank to comply with any undertakings or arrangements in
the Tranche A Bonds Subscription Agreement, the Prospectus or any of the Bond Agreements
or any other documents referring to the aforementioned, the Lead Investor has the right to
terminate the Tranche A Bond Subscription Agreement, but this does not constitute a case of
cross default, as defined by Regulation 18/2006 and, consequently, cannot trigger a
prepayment, acceleration or increase in the initial costs of the Bonds.
2.9. Payments
(a) All payments of principal and interest in respect of the Bonds will be made on the
applicable Interest Payment Date and/or Redemption Date, as applicable, by the Paying
102
Agent to the Bondholders registered in the Bond Registry as of the applicable Record
Date. "Record Date" shall be the date three (3) Business days prior to the applicable
Interest Payment Date or the Redemption Date, as applicable. All payments will be
subject to applicable fiscal, tax or other laws, regulations or directives. No commission
or expenses shall be charged to the Bondholders in respect of such payments.
(b) The Bank has reserved the right at any time to vary or terminate the appointment of the
Paying Agent and appoint a substitute and/or additional or other paying agents, subject
to the prior written consent of the Bondholders and provided that it will, as long as any
of the Bonds remains outstanding, at all times maintain a paying agent having a
specified office in Romania. Notice of changes in the Paying Agent or its specified
office will be given to the Bondholders in accordance with Section 7 (Notices) in this
Section II. Bonds Terms and Condition.
3.
Prescription
Claims against the Bank for payments in respect of the Bonds shall be prescribed and become
void unless made within three (3) years (in the case of principal or interest) as of the
appropriate Relevant Date thereof. As used in these Terms and Conditions, "Relevant Date" in
respect of any Bond means the date on which the payment thereof first becomes due.
4.
Events of Default -
With respect to the Bonds, it shall be an "Event of Default" if (a) the Bank fails to pay when
due the principal or the interest on any bond due in accordance with the Prospectus or (b) any
bankruptcy proceedings are initiated against the Bank or the Bank files a petition
seeking bankruptcy under any applicable law.
Notwithstanding anything to the contrary in this Prospectus, only liquidation of the Issuer can
trigger the advanced repayment of the Bonds prior to maturity. The conversion of the Bonds
does not constitute an advanced reimbursement.
Consequences of Events of Default:
(a) If the Issuer fails to pay on due date any principal of, or interest on the Bonds outstanding
under the Prospectus, the Bondholders may, in compliance with the NBR Regulation 18/2006,
commence the bankruptcy and the subsequent liquidation proceeding against the Issuer in
accordance with Romanian law and shall be able to request the repayment of the Bonds only
within the bankruptcy or liquidation procedure of the Issuer.
(b)
As long as any portion of the Bonds qualifies as subordinated indebtedness the Bonds
cannot be accelerated. However, if there shall have been entered against the Issuer a decree or
order by a court or other competent authority declaring the Issuer Bankrupt, or any resolution
has been passed for the liquidation within the insolvency proceedings of the Issuer, or a court or
other competent authority has made a decision to commence bankruptcy proceedings against
103
the Issuer, then such will be the only situation under the Prospectus provided that the Bonds
will be qualified as supplementary Tier 2 Capital when the Bondholders may declare the
principal of, and all accrued interest on, the Bonds to be, and the same shall thereupon become,
immediately due and payable by the Issuer without any further notice and without any
presentment, demand or protest of any kind, all of which are hereby expressly waived by the
Issuer. In any such bankruptcy or liquidation of the Issuer, the payment of any amounts payable
shall be subordinated to the payment of all unsubordinated indebtedness.
5.
Conversion
Conversion Rights. Subject to the conditions set forth in this Section 5 any Bondholder may
choose to effect the conversion of all or any portion of the outstanding principal of Bonds held
by such Bondholder into Shares of common stock of the Bank free and clear of any
Encumbrance (as defined below) and together with all rights attaching thereto: (i) by sending a
Conversion Notice in the form of Annex 4 within (30) days from a Price Fixing Date or (ii) by
sending a Conversion Notice in the form of Annex 4 within 90 days immediately following a
Liquidity Event Date. For the avoidance of doubt, the Issuer shall mention the exact
Conversion Date in the notification towards Bondholders of each Price Fixing Date at least
fifteen (15) days prior to such date and within five (5) days after a Liquidity Event Date.
The Conversion shall be made at a price per Share to be determined on the applicable Price
Fixing Date or Liquidity Event Date, equal to the average between the highest and lowest daily
price of the Shares on the Spot Regular market, weighted by the daily trading volume on the
Spot Regular market over the 90 days on which the Shares were traded on BVB, immediately
prior to the applicable Price Fixing Date or Liquidity Event Date, as applicable, as illustrated in
the following price formula:
⎛ ( ph + pl )
⎞
∗ Vd ⎟
2
⎠
d =1
90
P=
∑ ⎜⎝
90
∑V
d =1
d
where
P is the Conversion Price
d denotes a trading day at the BVB
Ph is the highest price at which the Shares are traded on the trading day d on the Spot Regular
market
Pl is the lowest price at which Shares are traded on the trading day d on the Spot Regular
104
market
Vd is the number of Shares traded on the trading day d on the Spot Regular market
The Conversion shall be effected by the offering to the Broker (who will forward it to the
Bank’s Board of Directors) of that number of Bonds owned by the Bondholder as may be
required, pursuant to the next sentence, in order to effect the payment of the Conversion Price
against the delivery by the Bank to the Bondholder of the number of Shares which the
Bondholder may be entitled to acquire by way of such Conversion. The number of Shares into
which the outstanding principal (or portion thereof) shall be converted, shall be determined by
dividing the RON equivalent of the outstanding principal the Bondholder has chosen to convert,
based on an exchange rate equal to the Spot Exchange on the applicable Price Fixing Date or
Liquidity Event Date, by the Conversion Price. The Conversion Price is subject to adjustment
as provided under the Sub-Paragraph Antidilution Provisions. For purposes hereof, "Spot
Exchange" shall mean the RON/Euro exchange rate published by the NBR as shown on
Reuters; and "Encumbrance" shall mean any claim, charge, mortgage, security, lien, option,
equity, pledge, proxy, power of sale, hypothecation, third party rights, pre-emptive right, right
of first refusal or, security interest of any kind, voting trust or agreement, obligation,
understanding or arrangement or other restriction on title or transfer of any nature whatsoever.
Conditions regarding the Conversion.
If a Bondholder chooses to convert a portion, but not all of its Bonds, the minimum aggregate
amount to be converted shall be five hundred thousand Euro ( Euro 500,000). In addition, the
aggregate number of Shares held by such Bondholder, after giving effect to the Conversion,
may not exceed ten percent (10%) of the outstanding Shares at any time, unless the approval of
the EGM and authorization of NBR is obtained; provided that, a Bondholder may sell or
otherwise dispose from time to time of any portion of Shares then held, so as to enable such
Bondholder to further exercise its conversion rights from time to time.
This limitation shall not apply to EBRD, which at the date of the Prospectus holds 278.100.206
Shares representing 14.6134 % of the Shares of the Bank.
No fractional Shares shall be issued upon any Conversion. If a fractional number of Shares
results from a conversion, the number of Shares will be rounded as follows: if the fraction is
equal to or less than one-half, the number of Shares will be rounded down to the next whole
Share; and if the fraction is greater than or equal to one-half, the number of Shares will be
rounded up to the next whole Share.
Manner of Effecting a Conversion.
The Bank shall notify the Bondholders of each Price Fixing Date at least fifteen (15) days prior
to such date and within five (5) days after a Liquidity Event Date by publishing a notice in one
of the leading national newspapers in Romania and by direct notice to any Bondholder holding
Bonds in a minimum aggregate principal amount of Euro 1,000,000 and through ah-hoc report
105
to BVB If a Bondholder elects to effect the Conversion, the Bondholder shall deliver a duly
executed irrevocable Conversion Notice to the Broker (who will forward it to the Council of
Administration of the Bank in order to approve and register the share capital increase with the
Shares resulted from such conversion) within thirty (30) days immediately following such Price
Fixing Date or within ninety (90) days following a Liquidity Event Date, as applicable. No
notice shall be accepted by the Bank after the 30th day following the Price Fixing Date or after
the 90th day following the Liquidity Event Date.
Upon a Conversion, the accrued and unpaid interest on the Bonds to be converted will be paid
to the Bondholder on the 3rd Business Day after the Shares Issue Date immediately following
such Conversion Date, for the Period, between the previous Interest Payment Date and the
applicable Shares Issue Date, excluding the Shares Issue Date. Upon any Conversion, the
rights of the converting Bondholder with respect to the outstanding principal and all interest
pursuant to the converted Bonds (other than accrued and unpaid interest mentioned in the
preceding sentence), shall cease. The Registrar shall make the appropriate book-entry changes
in the Bond Registry.
Upon a Conversion, the share capital of the Bank shall be increased, with the approval of the
Board, without the exercise of any pre-emptive rights otherwise applicable in share capital
increases. The Bank shall take all appropriate and necessary steps to effect any Conversion
within 45 days following the Conversion Date, including but not limited to convening the
Meeting of the Board of Directors for the approval of any required capital increase, filing and
obtaining all necessary regulatory approvals, issuing and registering the Shares on the name of
the entitled Bondholder in the Shareholders’ Register
Antidilution Provisions. The Conversion Price shall be subject to adjustment from time to time
if the Bank grants or issues rights or warrants (including convertible Bonds and similar
securities) entitling holders to subscribe or tender for or purchase Shares at a price per share
less than the Conversion Price applicable at such time. In such event, the Conversion Price will
be set equal to such lower price. For the avoidance of doubt, such adjustment shall exclude
stock, stock dividends, stock splits, and "bonus shares" which the Bank may issue from time to
time.
6.
Undertakings
The Bank undertakes to the Bondholders to comply with the endeavours set forth in Annex 2A
attached hereto The Issuer undertakes to observe certain standards which will increase the
performance of the Bank for the benefit of the Bondholders and to provide certain information
and documents to the Bondholders.
The breach of these undertakings does not constitute an event of default and consequently
cannot trigger the acceleration, early repayment of the Bonds or the increase in the initial costs.
106
7.
Notices
Except as otherwise provided in this Prospectus, all notices regarding the Bonds shall be validly
given if published in a leading daily newspaper in Romanian with nationwide coverage. For all
purposes it shall be deemed that Bondholders have acknowledged the contents of any notice
given in accordance with this Section (except as otherwise provided herein).
The publishing of the notice in such newspapers may be substituted by the delivery of the
relevant notice to each Bondholder. Any such notice shall be deemed to have been given to the
Bondholders on the seventh day after the sending of such notice.
Except as otherwise provided herein, notices given by any Bondholder pursuant hereto
(including to the Bank) shall be in writing and given by submitting the same with the Paying
Agent provided,.
8. Use of proceeds
The net proceeds from the sale of the Bonds will be used to increase the Bank's Supplementary
Tier II Capital base and finance the general operations of the Bank and the expansion of the
Bank's operations, including its branch network.
9. Due date and description of the loan amortization methods, including repayment
procedures. In case of an early amortization, upon the Issuer’s or holder’s initiative,
description of the early amortization conditions and methods.
Redemption:
(a)
Final Redemption
Outstanding Bonds will be redeemed at their par value on the
Interest Payment Date falling on the Maturity Date.
(b)
No Pre-Payment
The Bank may not at any time pre-pay, purchase or otherwise
acquire or redeem Bonds in whole or in part prior to the Redemption Date.
10 Return on the Bonds
It is presented in Section 2.7.
11. Meetings of Bondholders
The Bondholders may convene general meetings to decide matters relating to their interests
regarding the Bonds in accordance with the applicable law. The relevant provisions regulating
the ordinary meetings of shareholders in terms of form, conditions, convening terms, proof of title
107
to the Bonds and voting procedures shall also be applicable to the meetings of the Bondholders.
A meeting shall be held at the expense of the Bank and shall be convened by the Bank upon the
written request of one or more Bondholders representing at least 25% of the total nominal value
of the issued and outstanding principal of the Bonds or, by the Bondholders’ representative after
the appointment of such representative in the Bondholders meeting.
In accordance with the Company Law, the Bondholders’ Meeting may, among others:
•
appoint a representative of the Bondholders and one or more substitutes, having the right
to represent the Bondholders before the Bank and the courts of law, to decide upon their
compensation thereof; the representative and the substitutes may not be involved in the
administration of the Bank but shall be entitled to assist in the GMS of the Bank;
•
perform any and all acts of supervision, and protect the common interests of the
Bondholders and authorize a representative for this purpose;
•
contest any amendment to the Bank's Articles of Association or to the terms and
conditions of the Bonds, which may impair or negatively affect the rights of the
Bondholders;
•
express opinions with respect to the issuance of new Bonds; and
•
establish a fund, which may be constituted from the interest payments due to the
Bondholders, in order to enable them to pay the expenses necessary for the protection of
their rights, establishing, at the same time, the rules applicable to the management of such
fund.
12. Resolutions underlying the issuance of Bonds and scheduled issuance date
• The Decision of the General Meeting of the Shareholders, dated 27.04.2012 and
30.10.2012.
• The Decision of the Board of Directors, dated. 26.02.2013.
• CNVM has approved this Offering Prospectus through the Approval Decision No. 304,
dated 04.04.2013
13. Restrictions on the free transferability of securities
There are no restrictions on the free transferability of the Bonds.
Title and Transfers. The Title to the Bonds belongs to the holders of the Bonds whose names
appear from time to time in the Bond Registry kept with the Registrar. Upon the transfer, the
title to the Bonds shall pass to the transferee upon the registration of such transaction in the
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Bond Registry in accordance with the civil and commercial laws in force in Romania.
14.
Fiscal aspects
The following information on tax issues regarding the Bonds are only for information
purposes and are in accordance with the applicable law and do not represent a complete
analysis of fiscal issues that may arise in connection with the acquisition or issuance of
convertible Bonds. This information is not and should not be considered by potential investors
as legal or fiscal indicators. Potential investors should be aware of the provisions of the tax
laws applicable in Romania when investing in the Bonds provided by this Offer and should
seek independent legal and tax consultancy.
The information below represents a brief overview of the tax regime applicable to Bonds, as
provided in the Fiscal Code of Romania adopted by Law No. 571/2003 with its subsequent
amendments (“Fiscal Code”).
Bonds and all interests thereto are not exempt from taxation (in general). Taxes applicable to
investors in the Bonds are: (i) tax on gains from the transfer of Bonds; and (ii) tax on income
from interests related to Bonds. Such taxes are set according to the resident/non-resident status
of the investor.
Resident investors
Resident natural persons
Tax on gains from the transfer of Bonds. Gains from the transfer of Bonds, which may result
from the transfer of the Bonds, consist of the positive difference between the selling price and
the purchase price of the Bonds, except any related costs (e.g. brokerage commission).
According to Article 66, paragraph (5) and Article 67 paragraph (3) of the Fiscal Code, the
gain from the transfer of Bonds shall be determined quarterly and it is imposed with a 16%
rate. The annual due tax is determined by the competent tax authority based on the income
statement.
Tax on interest. According to Art. 67 (2) of the Fiscal Code, interest income is taxed with 16%
of its value. This tax is withheld by the payer of the interest rate (Bank).
Resident legal persons
Tax on gains from the transfer of Bonds. Gains resulting from the transfer of Bonds by
resident legal entities are included in the taxable income of the legal persons. The tax on the
profit of such taxable income is 16%.
Tax on interest. Interest paid on Bonds is included in the taxable income of resident legal
entities. The tax on the profit of such taxable income is of 16%.
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Non-resident investors
Non-resident natural persons
Tax on gains from the transfer of Bonds. According to Art. 115 (2) and Art. 66 (5), as well as
Art. 67 (3) of the Fiscal Code, the gain from the transfer of Bonds shall be determined
annually and it is imposed with a 16% rate.
Tax on interest. According to Art. 116 (2) d) of the Fiscal Code, the tax on interest on Bonds
paid by non-resident natural persons is 16%. This tax is withheld by the interest payer (Bank).
Non-resident legal persons
Tax on gains from the transfer of Bonds. Gains from the transfer of Bonds obtained by nonresident legal entities are not subject to taxation in Romania, with the exception when the nonresident legal person has a permanent establishment in Romania. The obligation to calculate,
declare and pay the tax until the 25th of the month following each quarter is that of the
Bondholder.
Tax on interest. According to Art. 116 (2) d) of the Fiscal Code, the tax on interest on Bonds
paid by non-resident legal persons is of 16%. This tax is withheld by the payer of the interest
(Bank).
Convention on the avoidance of double taxation
According to Art. 118 of the Fiscal Code, in the case of non-residents from countries which
have signed a double taxation convention with Romania, the taxes paid by such non-resident
person cannot exceed the taxes imposed by the convention for the avoidance of double
taxation. If the tax rates established by the laws of Romania are more favourable than those
provided by the convention, the more favourable tax rates shall be applied. For the application
of the convention, the non-resident legal person is obliged to submit the certificate of fiscal
residence issued by the competent authority of its state of residence to the income payer at the
time of the income.
Specific provisions related to International Finance Corporation
According to Article VI, Section 9, Par. (a) of the IFC Articles of Agreement (the “Articles of
Agreement”) which were implemented into the Romanian legislation by Law no. 28/1991, as
amended, “IFC, its assets, property, income and its operations and transactions authorized by
the Articles of Agreement, shall be immune from all taxation and from all customs duties. IFC
shall also be immune from liability for the collection or payment of any tax or duty”. Thus,
IFC is exempted from paying tax in Romania, in accordance with the above mentioned
provisions of the Articles of Agreement (including tax on interest on Bonds).
Specific provisions related to the EBRD
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In accordance with the Agreement dated May 29, 1990 for the establishment of the European
Bank for Reconstruction and Development, ratified by Romanian by Law No. 24/1990, EBRD
is exempt from any direct Romanian taxation (including the taxes related to the Bonds).
3. OFFER CONDITIONS
Offer conditions, statistics on the offer, draft schedule and subscription request
methods
The Offer is made in accordance with Romanian legislation, respectively according to,
amongst others, the Capital Markets Law, Banking Law, Company Law, Foreign Currency
Regulation, secondary legislation issued by NBR and CNVM.
The offering consisting of the sale of 50,000,000 Bonds issued by the Bank, with the
following features:
• 50.000.000 registered securities issued in dematerialized form, evidenced by book
entry
• Issue price: 0.6 EURO
• Nominal value: 0.60 Euro/bond;
• The total nominal value of the issue: 30,000,000 Euros.
The Offer shall be initiated in accordance with CNVM Regulation No. 1/2006 with
subsequent amendments and supplements within 2 days from the publication of the ad. The
Pre-Emptive Offer shall run for 30 calendar days and the Primary Offer for 9 Business Days.
Any modification of the terms of this approved offer shall be done at the request of the
Issuer (after obtaining the approval from CNVM for the amendment of the Prospectus) and
in accordance with the law.
This Offer is structured in two distinct offers:
1- The Pre-emptive Offer: This offer is addressed to all the Shareholders of
the Bank, as registered at the “Registration Date”
2- The Primary Offer is addressed primarily to the Lead Investor; if there
will be any residual Bonds left after the Lead Investor’s subscription,
these will be offered to Qualified Investors.
:
Considering this distinction, this Primary Offer is divided into two tranches:
(i) The Tranche A Bonds offer, addressed to the Lead
Investor in priority to the Tranche B Bonds offer, and is
comprised of all Bonds that remain unsubscribed to after
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the close of the Pre-emptive offer stage, and is up to
18,938,347.80 EUR.
(ii)The Tranche B Bonds offer: This offer is addressed to Qualified
Investors and is comprised of any Bonds that remain unsubscribed
after the close of the Pre-emptive Offer minus the Bonds that are
subscribed by the Lead Investor in the Tranche A Bonds offer.
The Pre-emptive Offer and the Tranche B Bonds offer are governed solely by the terms of
this Prospectus, as well as the other Bond Agreements other than the Tranche A Bonds
Subscription Agreement.
The Tranche A Bonds offer are governed by the terms of this Prospectus as well as by the
Tranche A Bonds Subscription Agreement, the main terms of which are disclosed in this
Prospectus, including in Annexes 1 and 2A.
Subscription method for the Pre-emptive Offer/Exercise of Pre-emptive Rights:
The Bonds will first be offered to Shareholders as at the Registration Date who will be
entitled, subject to the Prospectus, to exercise pre-emptive rights to purchase Bonds up to a
maximum aggregate principal amount equal to the product of Euro 30,000,000 times a
fraction, the numerator of which is equal to the aggregate number of Shares held by such
shareholder as of May 21, 2012, and the denominator of which is equal to the aggregate
number of Shares issued and outstanding on May 21, 2012 .The maximum number of the
Bonds that can be purchased by each entitled shareholder as of May 21, 2012 is equal to the
previously mentioned product divided by 0.6. No fractional Bonds shall be issued. If a
fractional number of Bonds results, the number of Bonds will be rounded as follows: if the
fraction is equal to or less than one-half, the number of Bonds will be rounded down to the
next whole Bond; and if the fraction is greater than or equal to one-half, the number of
Bonds will be rounded up to the next whole Bond. The Pre-emptive Offer will begin on
09.04.2013 and continue for a period of thirty (30) calendar days until 08.05.2013, at the
Broker’s head offices and the CNVM authorized agencies of BT Securities between 9.0016.00 each Business Day, except for the last day (08.05.2013), which will close at 14.00.
Subscriptions in the Primary Offer:
Tranche A Bonds offer: The Tranche A Bonds will be issued in an aggregate principal
amount of up to Euro 18,938,347.80 consisting of 31.563.913 Bonds, and are reserved for
subscription by International Finance Corporation as Lead Investor pursuant to the Tranche
A Bond Subscription Agreement. In accordance with the Tranche A Bond Subscription
Agreement, IFC agreed to subscribe and buy all Tranche A Bonds, subject to the conditions
precedent and the termination provisions stipulated in Annex 1 to the Prospectus.
The Issuer and the Lead Investor concluded a Tranche A Bond Subscription Agreement
under English law which documents the agreement of the Issuer to reserve the Tranche A
Bonds for the Lead Investor. The Tranche A Bond Subscription Agreement contains certain
undertakings by the Issuer detailed in the Undertakings provided in Annex 2A to the
Prospectus which mainly represent standards which will increase the performance of the
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Bank for the benefit of the Bondholders. In accordance with the Tranche A Bonds
Subscription Agreement, the Lead Investor’s obligation to buy Bonds is subject to certain
conditions precedent, as detailed in Annex 1 to this Prospectus. Likewise, the Lead Investor
has the right to terminate the Tranche A Bonds Subscription Agreement before its
subscription within the Primary Offer, if certain events such as those detailed in Annex 1 to
this Prospectus occur. In case of termination of the Tranche A Bonds Subscription
Agreement, the purchaser of Tranche A shall not be entitled to subscribe to the Tranche B
Bonds.. Furthermore, the Lead Investor is entitled to certain fees that have been outlined in
Section ”Pricing” in Section 3 Offer Conditions, in II. Bonds Terms and Conditions of this
Prospectus and that concern its role as Lead Investor investing in the reserved Tranche A
Bonds.
Tranche B Bonds offer: The Tranche B Bonds will be the unsubscribed Bonds from the Preemptive Offer and excluding the ones subscribed in Tranche A Bonds.
Only Qualified Investors can subscribe in this tranche B
The results of the Pre-emptive Offer and the number of the Bonds object of the Primary
Offer, i.e. the number of the Bonds of Tranche A and, respectively, Tranche B will be
announced through a press release in a national newspaper on the first Business Day of the
Primary Offer.
Following the closing of the Pre-emptive Offer, the Lead Investor may subscribe for
Tranche A Bonds and Qualified Investors may subscribe for Tranche B Bonds, in the
Primary Offer respectively, beginning on the first Business Day after the closing of the Preemptive Offer, from 09.05.2013 until 21.05.2013 at the broker’s head offices the CNVMauthorized agencies of BT Securities from 9.00-16.00 each Business Day, except for the
Offering closing day, which will close at 14.00;
The Lead Investor is entitled to subscribe in the Primary Offer up to Euro 18,938,347.80
consisting of up to 31,563,913 Bonds.
The Lead Investor may exercise its right to subscribe in the Pre-emptive Offer up to its pro
rata share of its shareholding in the Issuer and during the Pre-emptive Offer Period on the
terms of this Prospectus. The Lead Investor can then subscribe up to maximum Euro
18,938,347.80 within the Primary Offer Period, where those Tranche A Bonds would be
reserved and allocated to the Lead Investor regardless of Tranche B subscription bids, on the
terms of this Prospectus and the Tranche A Bond Subscription Agreement.
Upon the subscription by the IFC of the Tranche A Bonds, but no later than the last day of
the Offer, 10:00 a.m. (Bucharest time), the Issuer shall send a current report to BVB on the
performance of the subscription to Tranche A Bonds.
On the last day of the Offer, if IFC has not subscribed the Tranche A Bonds, they shall be
allocated to the Tranche B Bonds. The Issuer, on the same day, by 10:00 a.m. (Bucharest
time) shall send a current report to BVB mentioning the allotment of the Tranche A Bonds
to Tranche B Bonds. This current report on the reallocation of the Tranche A Bonds to
Tranche B Bonds shall not and cannot be considered an amendment to the Prospectus.
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On the Allocation Date the Tranche A Bonds will be first allocated to IFC and then the
Tranche B Bonds, provided there are remaining Bonds available for this tranche, will be
allocated to Qualified Investors on pro-rata basis in the case of over-subscription.
The Offer will be considered successfully closed, if there are subscribed Bonds in an
aggregate amount of minimum 20.000.000 Euro. In the event that the offer is not entirely
subscribed by the end of the subscription period the Bonds which will remain unsubscribed
after the closing of the Pre-emptive Offer and Primary Offer will be annulled.
In case the Offer is not subscribed up to the successful threshold mentioned above, the
amounts subscribed will be reimbursed to the investors within 10 Business Days as of the
closing of the Offer, by banking transfer in the banking account mentioned in the
subscription form.
The Broker shall send the Bondholders a confirmation certifying the ownership over the
Bonds subscribed and allotted at the issuance date.
The results of the Offer shall be published in a national newspaper within 5 Business Days
as of the date on which the CNVM confirmed that it had received the notification of the
Issuer regarding the result of the offering of Bonds.
Reasons beyond the Issuer or Intermediary’ control can cause delays in data processing or
in the transmission to CNVM of the notification concerning the results of the offering of
Bonds or in obtaining the confirmation regarding the receipt by the CNVM of the above
mentioned notification. Therefore, the Broker and the Issuer are not responsible in any way
if the amounts are reimbursed with delay to the investors, if the subscriptions are not
validated or if the transferred amount is greater than the amount subscribed.
Distribution and allocation plan of securities
Only those shareholders of the Bank who are registered in the Shareholders' Register on May
21, 2012 can subscribe Bonds within the pre-emption right period.
The Tranche A Bonds will be allocated to the International Finance Corporation as Lead
Investor pursuant to the Tranche A Bond Subscription Agreement.
In case the Tranche B will be oversubscribed, the allocation of the Bonds will be done by the
“Pro-rata method” principle.
The allocation will be done in the first Business day after the closing of the Primary Offer.
The amounts for the invalided subscriptions or the amounts exceeding the allotted Bonds will
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be returned to the subscribers in 10 Business days, after the Allocation Date in the Bank
accounts mentioned in the subscription form.
Price setting
The offering consisting of the sale of 50.000.000 Bonds issued by Banca Transilvania, with
the following features:
• 50.000.000 registered securities issued in dematerialized form, evidenced by book
entry securities;
• Issue price: 0.6 EURO
• Nominal value: 0.60 Euro/Bond;
The commission due to the Broker for all operations related to the mediation and distribution
of the offering of Bonds issued by Banca Transilvania is 0.25% applied to the total value of
subscribed Bond issuance. The respective fee is incurred entirely by the Issuer.
The Issuer shall pay to the Lead Investor:
(A) As consideration for the Lead Investor's commitment to subscribe for the Tranche A
Bonds in the Primary Offer, a commitment fee at the rate of 0.5% on the amount of the
principal amount of EUR 18,938,347.80 from the signing date of the Tranche A Bond
subscription Agreement until the Issue Date. The commitment fee shall be calculated on the
basis of a 360-day year and the actual number of days in the relevant period, and be payable
on the first Interest Payment Date.
(B) a front end fee of 1% on the amount subscribed by IFC in the Primary Offer, covering the
Tranche A Bonds investment related processing costs;
(C) The Issuer shall pay all taxes (including stamp taxes), duties, fees or other charges
payable on or in connection with the execution, issue, and, where appropriate, registration
notarization or translation of the Tranche A Bond Subscription Agreement.
"The Issuer shall pay or cause to be paid to the Lead Investor or as the Lead Investor may
direct:
i)
all of the Lead Investor’s reasonable costs and expenses, including legal fees incurred
in connection with the Lead Investor’s purchase of the Tranche A Bonds up to a maximum
amount of EUR 30,000.
(ii)
In line with applicable law, and subject to any mandatory provisions or requirements
of Regulation 18/2006, all of the Lead Investor’s reasonable costs and expenses, including
legal fees, incurred by the Lead Investor in relation to the protection or enforcement, or
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attempted protection or enforcement, of any rights under the Tranche A Bond Subscription
Agreement or the Prospectus as it relates to the Tranche A Bonds, or any other documents
related to any thereof.
Placing and Underwriting
BT Securities and the Bank
The Bank holds 98.67 % of the share capital of BT Securities S.A., the Broker, Paying Agent
and the Distribution Agent of this Offer. In connection with the Offer, the Bank will be
paying certain fees to BT Securities, i.e. a fee of 0.25% from the amount of the subscribed
Offer.
International Finance Corporation – Lead Investor
IFC as Lead Investor has agreed to subscribe to and purchase the Tranche A Bonds to be
issued by Banca Transilvania through BT Securities as Broker subject to the terms and
conditions of the Tranche A Bond Subscription Agreement summarized in the Prospectus.
IFC is an international organization established in 1956 pursuant to the Articles of Agreement
which govern its operations. As of June 30, 2012, 184 countries were IFC shareholders. The
principal office of IFC is located at 2121 Pennsylvania Avenue, N.W., Washington, D.C.
20433, United States of America. More information about IFC can be found at www.ifc.org
IFC and the Bank
IFC as the Lead Investor has entered into the Tranche A Bond Subscription Agreement, in
connection with the Tranche A Bonds offer of the Primary Offer.
Subscription and Payment
The Pre-emptive Offer will begin on 09.04.2013 and continue for a period of thirty (30)
calendar days until 08.05.2013 in order for the shareholders registered on the Registration
Date in the Issuer’s Shareholders’ Register kept with the Central Depositary to exercise their
pre-emptive right at the head offices of the Broker (Cluj-Napoca, bld. 21 Decembrie 1989,
nr.104, et.1) and CNVM authorized agencies of BT Securities from 9.00-16.00 each Business
Day except for the day of the Offer, 08.05.2013, which will close at 14.00.
The Primary Offer commences on the first Business day, after the expiry of the Pre-emption
Period and continues for a period of 9 Business days until 21.05.2013 in order for the
Tranche A and Tranche B investors to subscribe the Bonds according to the terms and
conditions provided in the Prospectus and the Bond Subscription Agreement.
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Bonds may be subscribed during the relevant Offer period (Pre-emptive Offer and Primary
Offer) by; (i) delivering the purchase price in the principal amount of the Bonds subscribed in
denominations of Euro by transfer to the account RO94 BTRL 0130 4202 9256 89XX, in
Euro in the name of the Broker – BT Securities, opened with Banca Transilvania, Cluj branch
or the settlement undertaking letter issued by a custodian agent (ii) completing a subscription
form (2 original copies), which will be available at the headquarters of the Broker and
CNVM authorized agencies of BT Securities (iii) providing appropriate identification
documents (as listed below) and proof of payment, if payment was made by transfer or the
settlement undertaking letter issued by a custodian agent. If the Bonds are paid by payment
order, this must contain the National Identification Number / passport no. for individuals and
the Tax Identification Number for companies. In order to be accepted, the completed and
signed subscription form must be submitted in original along with the following documents:
1. For resident individuals who subscribe on their own behalf:
- Identity card (original and/or copy)
- The proof of payment (copy of the payment proof issued by the paying Bank).
2. For resident individuals who subscribe on other individuals’ behalf
- The proof of payment (copy of the payment proof issued by the paying Bank
and).
- Notarized power of attorney (original and copy).
3. For resident individuals who subscribe on behalf of a minor:
- The proof of payment (copy of the payment proof issued by the paying Bank).
- Birth certificate and/or tutor proof (original and copy).
- Identity card (original and copy)
4. For disabled or temporarily mentally ill resident individuals:
- The proof of payment (copy of the payment proof issued by the paying Bank)
- Legal documents proving guardianship (original and copy).
5. For non-resident individuals who subscribe on their own behalf:
- Passport (original and/or copy)
- The proof of payment (copy of the payment proof issued by the paying Bank ).
6.For resident legal entities that subscribe on their own behalf:
- Copies of the identification documents of the legal entity (statute, charter,
etc.), evidencing the legal representatives of the legal entity,
- registration certificate
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-
and)
Authorization in original for the individual who signs the subscription form;
ID of the representative of the legal entity/legal representative
7.For non-resident legal entities:
- Copies of the identification documents of the legal entity: constitutive
documents of the legal entity (statute, charter, etc.), evidencing the legal
representatives of the legal entity,
and/or the payment in cash)
- Authorization in original for the individual who signs the subscription form;
- ID of the representative of the legal entity/legal representative
8.For non-resident individuals who subscribe by authorization:
- Passport (copy for the non-resident individual)
- Identity card (original and copy for the mandated)
- Authorization/mandate by which the authorized person can perform operations
on behalf of, and with the cash of, the non-resident individual.
9.For resident legal entities that subscribe on behalf of other non-resident legal entities:
- Copies of the identification documents of the legal entity: constitutive
documents of the legal entity (statute, charter), evidencing the legal
representatives of the resident legal entity,
- Mandate/order from the non-resident company for performing the subscription
- Original authorization for the individual who signs the subscription form.
10. Credit or financial institution, from a Member State of the European Union or the
European Economic Area, or, where applicable, a credit of financial institution from a
third party.
• Identification documents of the institution, evidencing the headquarter, institution
type, place of incorporation and legal representatives – original
• Original authorization for the individual who signs the subscription form
• Identity card of the legal representative/the individual who signs the subscription form
• The proof of payment
11. EBRD
• A copy of the Agreement Establishing the EBRD
• A copy of the Headquarters Agreement of EBRD
• Certificate of Secretary for the person who signs the subscription form and if
applicable, the PoA - original –
• A copy of identity card of passport for the person who signs the subscription form;
• Proof of payment
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12. IFC
•
•
•
•
A copy of the Romanian Law on IFC
Certificate of Secretary for the person who signs the subscription form or
the power of attorney.–
A copy of identity card or passport for the person who signs the
subscription form;
Proof of payment
* For non-resident legal entities and individuals, all required documents must be translated
and legalized.
Validity of Subscription
A subscription for Bonds where the purchase price is paid by transfer is valid only if the total
purchase price of the subscribed Bonds' value arrives in the Broker’s account mentioned
above
• for the Pre-emptive Offer until 15.00 Bucharest time, on the last day of the Preemtion Offer
• for the Primary Offer until 15.00 Bucharest time on the last day of the Primary Offer.
For investors using custodian banks, the subscription will be based on the custodian bank's
guarantee of the settlement for the subscribed sum on the Allocation Date. The sum
transferred by the custodian bank have to be on BT Securities account, until 15.00 (Bucharest
Time) on the Allocation Date. Any subscriptions that are not valid will not enter in the
allocation process. If a deposited sum is greater than the sum necessary to subscribe for the
number of requested Bonds, the request will be validated for the number of requested Bonds.
If the deposited amount is smaller than the amount required for the subscription to the Bonds
requested in the subscription form, the subscription shall be invalidated for the entire
quantity.
Irrevocability of Subscription
Subscriptions made in the Offer are irrevocable. If the Prospectus is subject to an amendment,
the subscriptions can be revoked within three (3) days from the date of the amendment being
published.
Subscription revocation can only be made at the same office where the Subscription has been
made. In this case, subscribers will fill in a subscription revocation form. In case of a
subscription revocation, the amounts corresponding to the subscribed Bonds will be returned
to the subscribers through a transfer to a bank account designated by the subscriber in the
subscription form. Payments corresponding to the revocations shall be made within 10
Business Days after the Allocation Date.
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Allocation Method
During the Pre-emptive Offer, Bonds may be subscribed only by the Bank’s shareholders
registered in the Shareholders’ Register as at May 21, 2012.
The Tranche A Bonds will be allocated to the International Finance Corporation as Lead
Investor pursuant to the Tranche A Bond Subscription Agreement
In case the Tranche B will be oversubscribed, the allocation of the Bonds will be done by the
“Pro-rata method” principle.
The allocation will be done in the first Business day after the closing of the Primary Offer.
If the number of the Bonds subscribed in Tranche B is lower than the offered Bonds, the
unsubscribed Bonds will be annulled.
In case the Offer is not subscribed up to the successful threshold of minimum Euro
20.000.000, the amounts subscribed will be reimbursed to the investors within 10 Business
Days as of the closing of the Offer, by banking transfer in the banking account mentioned in
the subscription form.
The amounts for the invalided subscriptions or the amounts exceeding the allotted Bonds will
be returned to the subscribers in 10 Business days, after the Allocation Date by banking
transfer in the bank accounts mentioned in the subscription form.
Amendment of Offer Terms
The Bank reserves the right to amend the Offer's terms before subscription in the Pre-emptive
Offer, subject to the prior approval of the CNVM, which amendment will be published in the
same manner as the Offer, as required by law.
Settlement; Issuance of the Bonds and Transfer of Ownership Rights over the Bonds
On the Issue Date, which is estimated to be 22.05.2013, the first Business day after the
closing of the Primary Offer:
•
•
•
•
•
the Bond Registry shall be prepared by the Broker;
the Broker shall prepare and send to CNVM the notification regarding the Offer
results
the Broker shall transfer the Bond Registry to the Registrar;
the Bonds shall be issued and the ownership rights over the Bonds shall be transferred
to the Bondholders by registration in the Bond Registry; and
the Broker shall send to the Bondholders confirmation certifying the ownership right
over the Bonds.
After the Issue Date, the Bonds shall be registered with the securities record department
within CNVM.
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The Offer is considered successfully closed, if on its closing date, a minimum aggregate
amount of 20.000.000 Euro is validly subscribed.
Representations and Warranties of the Issuer; Indemnification
Under the Tranche A Subscription Agreement, the Bank makes certain representations and
warranties regarding itself and Tranche A Bonds, and the Bank agrees such representations
and warranties, as detailed in Annex 2B be made in relation to all Bonds and for the benefit
of all Bondholders. For the avoidance of doubt, failing to comply with any of these
representations and warranties of the Bank shall not represent an Event of Default and cannot
consequently trigger the early repayment, acceleration or the increase in the initial costs. The
Bank also agrees to an indemnification clause which will apply to all Bondholders as follows:
Provided that these indemnities can be claimed only in the bankruptcy or liquidation
procedure of the Issuer together with the principal claim and subordinated to any other
unsubordinated claims, in compliance with the Regulation 18/2006 and any supplementary
Tier II Capital legislation; The Issuer agrees to indemnify the Bondholders for damages
arising out of (i) any untrue statement contained in the Prospectus or any of the Bonds
Agreement or any omission to state a material fact necessary to make the statements therein
not misleading; (ii) any misrepresentation or breach by the Issuer of any of its representations
and warranties and/or obligations arising under or relating to the Prospectus, the Bonds
Agreement, the Bonds, the Terms and Conditions of the Bonds (iii) any restriction, delay,
dilution or other limitation on the exercise of the Bondholders’ conversion rights (iv) any
cancelation, withdrawal or invalidation of any Authorization necessary, required or advisable
pursuant to the Issuer’s Articles of Association, Regulation 18/2006 and supplementary
legislation or the applicable law in connection with the Offer, the issue and sale of the Bonds,
including without limitation, any extra ordinary general meeting (EGM) resolution and/or
Board of Directors’ decision approving the creation, issue and sale of the Bonds and/or
execution of any Offer document and/or Bonds Agreement , including failure to convene a
new EGM to reinforce the mandate the Board of Administrations to increase the share
capital and issue the Shares to the converting Bondholder, if needed.
The Bank represents and warrants, to the best of its knowledge, that the terms and conditions
of this Bond issue are in compliance with Regulation 18/2006, and that it has undertaken all
reasonable efforts to ensure such compliance. NBR has not issued a confirming opinion on
this point.
Preparation of the Prospectus
This Prospectus has been prepared by the Bank and BT Securities. Each of the Bank,
represented by Mr. Nicolae Tarcea - Deputy General Manager and BT Securities, represented
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by Mr. Rares Nilas, General Manager, accepts the responsibility for the contents of the
Prospectus and confirms that the information contained herein is accurate, and that they do
not contain omissions that could affect significantly the contents of the Prospectus.
4. ADMISSION TO TRADING AND TRADING METHODS
The Issuer does not intend to trade its Bonds at the BVB, and the Bonds will not be admitted
for trading on a regulated market or any other trading platform (alternative, multilateral
trading facilities), and according to its knowledge, there are no other regulated markets or
alternative systems where securities of the same class with the bid are admitted to trading.
Nor is there a firm commitment between the Issuer and another brokerage company
regarding the trading of securities on the secondary market for the provision of liquidity by
displaying quotations of sale and purchase.
5. ADDITIONAL INFORMATION
No opinions of a consultant were used in the drafting of this note.
ISSUER,
BANCA TRANSILVANIA S.A.
BROKER
BT SECURITIES S.A.
Deputy CEO
Nicolae Tarcea
[illegible signature]
General Manager
Rareş Nilaş
Deputy CEO
Luminiţa Runcan
122
ANNEX 1
Conditions of the Tranche A Purchaser’s Obligations
Conditions of the Tranche A Purchaser's Obligations.
The obligation of the Tranche A Purchaser to purchase the Tranche A Bonds pursuant to the
Tranche A Bond Subscription Agreement is subject to the following conditions precedent listed
below, with the observance by the Issuer of the applicable legislation regarding equal treatment
of investors as regards disclosure of information, and further provided that the Issuer ensures that
nothing in the documents received by IFC shall contain any “privileged” information ( as such
term is defined by the Capital Markets Law).
As of the First Business Day of the Primary Offer:
(a) The Prospectus as authorized by CNVM is in form and substance acceptable to IFC;
and (ii) the other Bond Agreements, as signed are in form and substance acceptable to
IFC;
(b)
the Tranche A Purchaser shall have received a certificate signed by any two (2)
Authorized Representatives of the Issuer, or any other officer duly designated by any of the
above, dated the date of the start of the Primary Offer Period, to the effect that:
(i)
the representations and warranties of the Issuer contained in the Tranche A Bond
Subscription Agreement and the Prospectus are true and correct at the start of the Primary
Offer Period as though made at and as of the start of the Primary Offer Period; and
(ii)
each of the Issuer and the Broker has performed all of its respective obligations to
be performed under the Tranche A Bond Subscription Agreement and/or under the
Brokerage and Distribution Agreement, and the Paying Agent Agreement and the
Registrar Agreement, as applicable, required to be performed or satisfied on or prior to;
the start of the Primary Offer Period;
123
(c)
the Tranche A Purchaser shall have received a certificate signed by two (2) Authorized
Representatives of the Issuer, dated the date of the start of the Primary Offer Period, certifying as
to the validity and effectiveness of the Articles of Association of the Issuer and the resolutions
adopted by the shareholders of the Issuer pursuant to the April 2012 and October 2012 EGMS
Resolution and the 2013 Board Resolution, respectively, approving the creation, issuance, sale
and execution of the Tranche A Bonds and the Terms and Conditions of the Tranche A Bonds,
and the incumbency and authenticity of signatures of relevant officers of those persons executing
such documents;
(d)
the Board of Directors shall have duly approved the Prospectus, the entry by the Issuer
into the Bonds Agreements and shall have nominated one or more individuals to execute the
Prospectus and such Bonds Agreements on behalf of the Issuer; including the Tranche A Bonds
Subscription Agreement on behalf of the Issuer;
(e)
all proceedings taken at or prior to the date of the start of the Primary Offer Period in
connection with the authorization of the Bonds shall be satisfactory, in form and substance, to
the Tranche A Purchaser, and the counsel of the Issuer shall have provided to the Tranche A
Purchaser all such counterpart originals or certified or other copies of such documents,
certificates and opinions as the Tranche A Purchaser may reasonably require in order to evidence
the accuracy and completeness of any representations and warranties, the performance of any
agreements and covenants or the compliance with any of the conditions herein contained;
(f)
the following Bonds Agreements, in form and substance satisfactory to the Tranche A
Purchaser, shall have been entered into by the respective parties, and each of such Agreements
must be continuing in full force and effect, and a copy of each such Agreements shall have been
furnished to the Tranche A Purchaser :
(i)
the Tranche A Bond Subscription Agreement
(ii)
the Brokerage and Distribution Agreement;
(iii)
the Registrar Agreement; and
(iv)
the Paying Agent Agreement;
(g)
the Tranche A Purchaser shall have received an opinion of the counsel of the Issuer,
dated the date of the start of the Primary Offer Period, addressed to the Tranche A Purchaser
covering matters related to the validity and legally binding effect of the Prospectus and the Bond
Agreements, compliance with the Romanian law,
the qualification of the Bonds as
supplementary Tier II capital under Romanian legislation, the validity of the conversion of the
Tranche A Bonds and such other ancillary matters thereto.
(h)
the Tranche A Purchaser shall have received (i) a letter, dated the date of the start of the
Primary Offer Period, of the counsel of the Issuer, addressed to the Tranche A Purchaser, stating
that the Prospectus has been prepared under their supervision save for any financial statements or
data contained in the Prospectus
124
(i)
the Tranche A Purchaser shall have received from it legal counsel a legal opinion, dated
the date of the start of the Primary Offer Period, addressed to the Tranche A Purchaser, in form
and substance acceptable thereto;
(j)
the Issuer shall have issued a letter, dated the date of the start of the Primary Offer Period
and addressed to its external auditors, in a form pre-agreed pre-agreed provided , for the
avoidance of doubt, that nothing in that letter shall contain any information the communication
of which to the Tranche A Purchaser may be in violation of the applicable capital markets law
(k)
before 7:00 a.m. (Bucharest time) on the date of the start of the Primary Offer Period,
there shall not have occurred any national or international calamity or development, crisis of a
political or economic nature, or change in the money or capital markets in which the Bonds are
being offered, the effect of which on such money or capital markets, in the judgment of the
Tranche A Purchaser or the Issuer, shall be such as materially and adversely to affect the ability
of the Issuer to perform its obligations under the Tranche A Bonds;
(l )
the Prospectus shall have been registered with, and approved by, the CNVM; and the
Issuer shall have delivered to the Tranche A Purchaser three (3) copies of the Prospectus and of
each amendment or supplement thereto, signed by two ((2) authorized representatives of the
Issuer;
( m) the Issuer shall have notified the Tranche A Purchaser if at any time during which the
Prospectus is used in connection with the Offer and sale of the Tranche A Bonds (in the view of
the Tranche A Purchaser), any event shall have occurred as a result of which, in the judgment of
the Issuer, the Prospectus would include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the light of the circumstances
under which they are made when such Prospectus is delivered, not misleading and, upon request
from the Tranche A Purchaser, shall have promptly prepared and furnished, without charge to the
Tranche A Purchaser, as many copies, as the Tranche A Purchaser may from time to time
reasonably request, of an amended Prospectus or a supplement to the Prospectus which will
correct such statement or omission;
(n)
the Issuer shall have promptly furnished to the Tranche A Purchaser copies of financial
statements and other periodic reports that the Issuer may furnish generally to all holders of its
debt securities;
(o)
the Issuer shall not have made, or permitted to become effective, any amendment to any
of the Bonds Agreements which may adversely affect the interests of the Tranche A Purchaser in
the Tranche A bonds, and shall have promptly notified the Tranche A Purchaser of any
termination of, or amendment to, any of the Bonds Agreements, and of any replacement or
substitution of the Paying Agent;
(p)
the Issuer shall have furnished to the Tranche A Purchaser the Certificate of Incumbency
and Authority, , evidencing the authority of the person or persons who will, on behalf of the
Issuer, sign the requests and certifications provided for, the Prospectus, any of the relevant
Bonds Agreement to which the Issuer is a party signatory, or take any other action or execute any
125
other document required or permitted to be taken or executed by the Issuer under the Tranche A
Bonds Subscription Agreement, the Prospectus, any of the relevant Bonds Agreements to which
the Issuer is a party signatory, and the authenticated specimen signature of each such person;
(q)
the Issuer shall have delivered to the Tranche A Purchaser evidence of an appointment of
an agent for service of process required under the Tranche A Bond Subscription Agreement;.
(r)
the legal fees and expenses of the legal counsel shall have been paid by the Issuer, or
other arrangements, satisfactory to the Tranche A Purchaser, shall have been made for the
prompt payment thereof by the Issuer.
Termination. (a) The Tranche A Purchaser may, by notice to the Issuer, terminate this
Tranche A Bond Subscription Agreement before its subscription in the Primary Offer
(i)
if any of the April 2012 EGMS Resolution, October 2012 EGMS
Resolution or the Board Resolution of February 26, 2013 is challenged;
(ii)
if there shall have come to the notice of the Tranche A Purchaser any
material breach of, or any event rendering untrue or incorrect in any
respect, any of the warranties and representations contained in the Tranche
A Bonds Subscription Agreement, the Prospectus, or in any of the Bonds
Agreements, or any of the documents related to any thereof, or any failure
to perform any of the Issuer’s undertakings or agreements in this
Agreement, the Prospectus, or any Bonds Agreement, or any of the
documents related to any thereof;
(iii)
if any of the conditions specified in the Tranche A Bonds Subscription
Agreement, the Prospectus, or in any of the Bonds Agreements, or any of
the documents related to any thereof, have not been satisfied or met to the
satisfaction of the Tranche A Purchaser by the start of the Primary Offer
Period unless previously waived by the Tranche A Purchaser; or
(iv)
if subscription of the Tranche A Bonds has not occurred within one
calendar year after the date of the Tranche A Bonds Subscription
Agreement.
(b)
The Tranche A Purchaser or the Issuer may, each by notice to the other, terminate
the Tranche A Bond Subscription Agreement at any time before subscription, if in the opinion of
the Tranche A Purchaser or the Issuer, as the case may be, there shall have occurred a material
adverse effect, any national or international calamity or development, crisis of a political or
economic nature, or change in the money or capital markets in which the Tranche A Bonds are
being offered, In the event that any party terminates this Agreement pursuant to this clause, the
Issuer or the Broker (as the case may be) undertakes to inform the investors to which the
Prospectus is addressed that the subscriptions for the Bonds shall not be validated and settled if
the success condition in the Prospectus is not met.
126
In case of termination of the Tranche A Bonds Subscription Agreement as provided above, the
Tranche A” purchaser shall not have a right to subscribe to the Tranche B Bonds.
127
ANNEX 2A - Undertakings
The following are the main undertakings that the Issuer has committed to in the ““
Tranche A Bond Subscription Agreement”. They mostly incorporate standards which will
increase the performance of the Bank for the benefit of the Bondholders. The breach of
these undertakings does not constitute an event of default and consequently cannot trigger
the acceleration, early repayment of the Bonds or an increase in the initial costs. For the
avoidance of doubt, The Events of Default triggering an acceleration are:
(a) If the Issuer fails to pay on due date any principal of, or interest on the Bonds outstanding
under the Prospectus, the Bondholders may, in compliance with the Regulation 18/2006,
commence the bankruptcy and the subsequent liquidation proceeding against the Issuer in
accordance with Romanian law and will be able to request the repayment of the Bonds only
within the bankruptcy or liquidation procedure of the Issuer..
(b)
As long as any portion of the Bonds qualifies as subordinated indebtedness the Bonds
cannot be accelerated. However, if there shall have been entered against the Issuer a decree or
order by a court or other competent authority declaring the Issuer Bankrupt, or any resolution has
been passed for the liquidation within the insolvency proceedings of the Issuer, or a court or
other competent authority has made a decision to commence bankruptcy proceedings against the
Issuer, then such will be the only situation under the Prospectus provided that the Bonds will be
qualified as supplementary Tier 2 Capital when the Bondholders may declare the principal of,
and all accrued interest on, the Bonds to be, and the same shall thereupon become, immediately
due and payable by the Issuer without any further notice and without any presentment, demand
or protest of any kind, all of which are hereby expressly waived by the Issuer. For the avoidance
of doubt, in any such bankruptcy or liquidation of the Issuer, the payment of any amounts
payable shall be subordinated to the payment of all unsubordinated indebtedness.
1-
Financial Undertakings: BT has committed to keep to the following financial ratios:
(i) a Risk Weighted Capital Adequacy Ratio of not less than twelve percent (12%);
(ii) an Equity to Assets Ratio of not less than five percent (5%);
(iii)an Economic Group Exposure Ratio of not more than twenty five percent (25%);
(iv) an Aggregate Large Exposures Ratio of not more than four hundred percent (400%);
(v) a Related Party Exposure Ratio of not more than fifteen percent (15%), excluding
exposure of the Issuer to any wholly owned operating subsidiary of the Bank
involved in financial services;
(vi) an Open Credit Exposures Ratio of not more than twenty five percent (25%);
(vii) a Fixed Assets Plus Equity Investments Ratio of not more than thirty five percent
(35%);
(viii) an Aggregate Foreign Exchange Risk Ratio of not more than twenty percent (20%);
(ix) a Single Currency Foreign Exchange Risk Ratio of not more than ten percent (10%);
(x) an Interest Rate Risk Ratio of not less than negative ten percent (-10%) and not more than
ten percent (10%);
(xi) an Aggregate Interest Rate Risk Ratio of not less than negative twenty percent (-20%)
and not more than twenty percent (20%);
128
(xii)
a Foreign Currency Maturity Gap Ratio of not less than (i.e. more negative than)
minus one hundred and fifty percent (-150%);
(xiii) an Aggregate Negative Maturity Gap Ratio of not be less than (i.e. more negative
than) minus three hundred percent (-300%)
The Bank shall also comply with the regulatory requirements of NBR.
Definitions of Capitalized Terms can be made available by the Issuer upon request.
2- Reporting Undertakings
For as long as any Bonds are outstanding, in addition to any legal reporting requirements under
the Law, in compliance with the capital market legislation the Issuer shall make available to the
Bondholders (a) within (120) days after the end of each fiscal year of the Issuer, an audited
consolidated balance sheet of the Issuer and its subsidiaries and related statements of operations,
stockholders' equity and cash flows for such fiscal year; (b) within (60) days after the end of each
of the first three fiscal quarters of the Issuer, an unconsolidated balance sheet of the Issuer and
related statements of operations, stockholders' equity and cash flows as of the end of and for such
fiscal quarter; (c) upon request ,within 60 days after the end of each fiscal quarter, the position
on each of the Financial Undertakings listed in Clause 1 above and such financial and operating
data and other information as may from time to time be reasonably requested.
3. Indemnification by Issuer in relation to the Bond related Documents
Under the Tranche A Subscription Agreement, the Bank makes certain representations and
warranties regarding itself and Tranche A Bonds, and the Bank agrees such representations and
warranties be made in relation to all Bonds and for the benefit of all Bondholders. For the
avoidance of doubt, failing to comply with any of these representations and warranties of the
Bank shall not represent an Event of Default and cannot consequently trigger the early
repayment, acceleration or the increase in the initial costs. The Bank also agrees to an
indemnification clause which will apply to all Bondholders as follows.
129
Provided that these indemnities can be claimed in the bankruptcy procedure of the Issuer
together with the principal claim and subordinated to any other unsubordinated claims, in
compliance with the Regulation 18/2006 and any supplementary Tier II Capital legislation; The
Issuer agrees to indemnify the Bondholders for damages arising out of (i) any untrue statement
contained in the Prospectus or any of the Bonds Agreement or any omission to state a material
fact necessary to make the statements therein not misleading; (ii) any misrepresentation or
breach by the Issuer of any of its representations and warranties and/or obligations arising under
or relating to the Prospectus, the Bonds Agreement, the Bonds,, the Terms and Conditions of the
Bonds (iii) any restriction, delay, dilution or other limitation on the exercise of the Bondholders’
conversion rights (iv) any cancelation, withdrawal or invalidation of any Authorization
necessary, required or advisable pursuant to the Issuer’s Articles of Association , Regulation
18/2006 and supplementary legislation or the applicable law in connection with the Offer, the
issue and sale of the Bonds, including without limitation, any extra ordinary general meeting
(EGM) resolution and/or Board of Directors’ decision approving the creation, issue and sale of
the Bonds and/or execution of any Offer document and/or Bonds Agreement , including failure
to convene a new EGM to reinforce the mandate the Board of Administrations to increase the
share capital and issue the Shares to the converting Bondholder, if needed.
4. Policy Undertakings
(a) Undertakings by the Bank contained in the policy rights annex of the Tranche A Bond
Subscription Agreement related to environmental and insurance aspects, which can be
made available by the Bank upon request of a Bondholder. These undertakings are
effective for as long as the Bonds are outstanding and continue to be in force after
the conversion of the Bonds into Shares.
(b) undertaking by BT to adopt the above mentioned undertakings as policies of the Bank
adopted by the Board of the Bank and presented to the shareholders of the Issuer at the next
Extraordinary General Meeting immediately following the Issue Date with a proposal for the
Bank to adopt these policies as Bank Policies and to amend the Articles of Association of the
Bank to reflect them accordingly.
5. Other Undertaking
The Bank to undertake that its business, activities and investments, and cause each of its
subsidiaries to undertake their business, activities and investments, in compliance with
applicable law;
- The Issuer agrees and undertakes to the Tranche A Purchaser that the Issuer shall ensure that,
upon the conveyance of Ordinary General Meeting of the Shareholders of the Issuer to be held at
a time following the date of the Tranche A Bond Subscription Agreement and having on the
130
agenda the election of the members of the Board of Directors, the Tranche A Purchaser will be
granted the right to propose an independent director to be elected as member of the Board of
Directors, subject to the requirements of, and in accordance with, the applicable law.
- EGMS Resolution. The Issuer agrees and undertakes to the Tranche A Purchaser that, not later
than January 2015, the Issuer shall arrange for a EGMS to be called with a view to reiterate that
the Bonds will not be admitted to trading and a EGMS to be called anytime needed throughout
the life of the Bonds to extend the powers of the Board of Administration to increase the share
capital and issue of shares upon conversion if limited in time, to cover the period until the final
maturity of the Bonds. .
131
Annex 2B - Representations
The Bank makes the following representations in relation to all Bonds and for the benefit of all
Bondholders. For the avoidance of doubt, failing to comply with any of these representations and
warranties of the Bank shall not represent an Event of Default and cannot consequently trigger
the early repayment, acceleration or the increase in the initial costs.
(a)
the terms and conditions of the Tranche A Bonds shall be as set forth in the Terms and
Conditions of the Bonds and will be no less favorable to the Lead Investor as the terms and
conditions of any other Bonds offered by the Issuer to any other Person;
(b)
the Prospectus complies with the Romanian law and the prevailing capital market laws
and regulations of Romania and all other applicable laws, and does not, and will not, contain any
untrue statement of a material fact or omit to state any material fact necessary in order to make
the statements therein, not misleading; in the light of the circumstances under which they were
made,
(c)
to the best of its knowledge at the time of issue of the Prospectus, the Bonds issue is fully
compliant with Regulation 18/2006 and the Issuer has undertaken all reasonable efforts to ensure
such compliance. For clarity, NBR has not issued a confirming opinion on such compliance;
(d)
the Issuer is duly incorporated and validly existing under the laws of Romania. The
Articles of Association of the Issuer is in full force and effect, and the Issuer possesses all
necessary power and authority to enter into the Tranche A Bonds Subscription Agreement and
the other Bonds Documents, and to offer, issue and sell the Bonds, and to undertake the
conversion thereof into share capital of the Issuer, and to perform its obligations under the terms
thereof;
(e)
the execution, delivery and performance of the Tranche A Bond Subscription Agreement
have been duly authorized and approved in accordance with Romanian Law and the Articles of
Association of the Issuer, including by the relevant corporate bodies of the Issuer, including
through its EGMS held on 27 April 2012 (the “April 2012 EGMS Resolution”) and the EGMS
held on 30 October 2012 the “October 2012 EGMS Resolution”) and subsequently, on basis of
the mandate given to it pursuant to the April 2012 EGMS Resolution and the October 2012
EGMS Resolution, by the Board of Directors meeting held on 26 February 2013 [] (the “2013
Board Resolution”) and no other corporate authorization is required except for another EGMS
for which the Issuer undertakes to call no later than January 2015, with a view to approve and
reiterate that the Bonds will not be admitted to trading and other EGMS to be called anytime and
if needed to extend the powers of the Board of Directors to increase the share capital and issue of
Shares upon conversion if the mandate is limited in time, to cover the period until the final
maturity of the Bonds. The Tranche A Bond Subscription Agreement has been duly executed
and delivered by the Issuer and is the valid and binding agreement of the Issuer enforceable in
accordance with its terms;
132
(f)
the creation, issue, sale, and execution of the Tranche A Bonds have been duly authorized
and approved by the relevant corporate bodies of the Issuer according to applicable law, inter
alia pursuant to the April 2012 EGMS Resolution and the October 2012 EGMS Resolution, as
well as the Board of Directors Decision of February 26, 2013, and when issued and paid for,
the Tranche A Bonds will constitute valid and legally binding obligations of the Issuer in
accordance with their terms; and the issue or sale of the Tranche A Bonds or the taking of any
other action contemplated therein does not now and will not result in a breach by the Issuer of
any terms of, or constitute a default under, or violation of, (i) the Articles of Association of the
Issuer (ii) any agreement or undertaking of the Issuer that is material, or (iii) any applicable law;
(g)
without limitation to paragraph (f), the Tranche A Bonds are convertible into shares of
common stock of the Issuer in accordance with the Terms and Conditions of the Bonds and the
shares of common stock issued upon conversion of Tranche A Bonds will be validly issued, fully
paid-in and free and clear of any pre-emptive rights or any similar rights arising under the
Articles of Association of the Issuer or applicable law. The Board of Directors is authorized to
increase the capital of the Issuer upon the conversion of Bonds, and to issue the shares to the
Bondholders who have exercised the Conversion Option and the undertaking regarding EGMS
Resolutions (provided in Annex 2A of the Prospectus) shall be complied with in a timely
manner.
(h)
the Issuer has obtained all authorizations required or advisable pursuant to the Articles of
Association of the Issuer or applicable Romanian law in connection with the offering, issue and
sale of the Tranche A Bonds;
(i)
the audited financial statements of the Issuer as of December 31, 2011 are true and
correct and fairly present the financial condition of the Issuer as of the dates indicated and its
results of operations and changes in financial position for the periods therein specified, and have
been prepared in conformity with the Accounting Principles consistently applied, except as
otherwise noted therein;
(j)
title to the Tranche A Bonds shall vest in the Lead Investor no later than the Issue Date,
free and clear of any and all encumbrances; and
(k)
as of the signing date of the Tranche A Subscription Agreement, there has not been any
material adverse effect on the Issuer or any development involving a prospective material
adverse change, in the condition, financial or otherwise, of the Issuer from that set forth in the
Prospectus.
(l) These representations shall be continuous and deemed repeated upon each and every
conversion of the Tranche A Bonds.
133
ANNEX 3
Audited consolidated financial statements and the Auditors’ reports for 2009, 2010, 2011
Individual financial statements for Quarter 3 2012
Please see the attached documents.
134
ANNEX 4
Conversion Notice Form
To:
BANCA TRANSILVANIA S.A. CLUJ-NAPOCA
NOTIFICATION
I, the undersigned________________________________________ holder of (identification
documents)__________________________, in my capacity as holder of subordinated unsecured
convertible Bonds of 2013, due in 2020, issued by Banca Transilvania S.A. (the “Bonds”), in
principal amount of EUR […..], in accordance with the account statement issued by the Central
Depository,
subject to the provisions laid down in the Prospectus for the Public Offering of Bonds,
having regard to the publishing by the Bank of the notification regarding the Price-fixing
Date/Liquidity Date,
I hereby irrevocably and unconditionally express my intention to convert: [choose one of the
following options] (i) all [….] Bonds that I hold, with a principal amount of Euro […..]; or (ii) a
number of [……] Bonds with a principal amount of Euro [….] (min. Euro 500,000) from the
total principal amount of Euro [……] of the Bonds that I hold, and at the same time request the
issuance and transfer by the Bank of the Shares that I am entitled to through this conversion.
I hereby declare that I acknowledge the fact that the number of Shares I am entitled to, based on
this conversion notice shall be determined by dividing the lei equivalent of the outstanding
principal amount I have chosen to convert, based on an exchange rate equal to the Spot
Exchange Rate at the Price-fixing Date or the Liquidity Date, at the Conversion Price.
The terms in capital letters, undefined in this notification shall have the meanings allocated to
them in the Prospectus for the Offering of 50,000,000 subordinated unsecured convertible Bonds
of [2013].
Bondholder
Date
TRANSLATOR’S EXPLANATORY NOTE: The above translation of the prospectus is
provided as a free translation from Romanian which is the official and binding version.
135

BANCA TRANSILVANIA S.A. Romanian joint

Transcription

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