KBC Bank has closed its previously announced acquisition of Raiffeisen Bank International (RBI)’s business operations in Bulgaria for around €1bn in cash.

The companies have signed an agreement in November last year, under which the Belgium-based bank will buy 100% shares of Raiffeisenbank (Bulgaria).

Raiffeisenbank is responsible for RBI’s banking operations in Bulgaria.

The deal also includes Raiffeisenbank’s subsidiaries Raiffeisen Leasing Bulgaria, Raiffeisen Asset Management Bulgaria, Raiffeisen Insurance Broker and Raiffeisen Service.

Raiffeisen Leasing Bulgaria is the fourth largest leasing company in the country with a 10.5% market share, and Raiffeisen Asset Management is the third-largest asset management company, with a 9.7% market share and €106m of assets under management.

Raiffeisen Insurance Broker serves Raiffeisenbank’s leasing and business customers, along with distributing products from 12 other insurance companies.

According to KBC Bank, the transaction will have a capital impact of around -1pp on its CET1 ratio for the third quarter this year.

KBC Group CEO Johan Thijs said: “Over the past 15 years, KBC Group has established itself as the biggest investor in Bulgaria, taking the leading position as part of the consolidation of Bulgaria’s financial sector.

“The Belgian KBC Group’s Bulgarian business is a successful example of building a sustainable bank-insurance model in accordance with KBC’s strategy for its core markets.

“By acquiring Raiffeisenbank (Bulgaria) and its subsidiaries, we will now ensure high-quality financial intermediation for over 2.5 million Bulgarian customers. We would like to offer a warm welcome to our new customers and colleagues joining our big family!”

Raiffeisenbank entered the Bulgarian market in 1994 and it currently has 2,500 employees and serves 635,000 customers.

The bank offers a range of banking, asset management, leasing and insurance services to individuals, SMEs and business customers.

It has a network of 122 bank branches across the country, along with a network of mobile banking advisors, external partners and credit intermediaries.

KBC Group has been present in Bulgaria since 2007, where it operates through United Bulgarian Bank (UBB), DZI (Insurance), UBB Interlease, UBB Pension Insurance, UBB Asset Management, UBB Factoring, UBB Insurance Broker and KBC Branch Bulgaria.

The company intends to merge the operations of Raiffeisenbank and UBB to further strengthen its position in the Bulgarian banking market.

The combined entity is expected to achieve a 19.3% market share in terms of assets on a pro forma basis, and become the biggest bank in Bulgaria.