The Austrian banking group Steiermärkische Bank und Sparkassen AG - the parent company of Sparkasse Bank Macedonia - has filed formal notice of its intention to make a takeover bid for all ordinary shares of UNI Banka AD Skopje. One hundred percent of the share capital and the voting rights.

The price is 126.3766353 euros per share, payable in denar equivalent. The notice was published on the Macedonian Stock Exchange.

This is not a first. The same group previously acquired and absorbed Ohridska Banka. So this year the Austrians are preparing to swallow a second Macedonian bank within the space of a few years.

Who approves what

The bid is not a done deal. Besides the consents of domestic bodies, foreign approvals are needed: clearance of the concentration from the Montenegrin and Serbian competition authorities, and an approval decision from the European Central Bank.

Only once those arrive will the bidder file a request with the Securities and Exchange Commission. If any of the foreign approvals is not obtained, the intention is considered withdrawn. The same applies if approval does not arrive within 12 months of the intention being announced.

It is worth noting who gets to decide the future of a Macedonian bank: a regulator in Podgorica, a regulator in Belgrade and the European Central Bank in Frankfurt. The domestic Securities and Exchange Commission waits its turn.

What consolidation means

Merging the balance sheets and networks of Sparkasse and UNI Banka creates a bank closing in on the market's leading three - Komercijalna, NLB and Stopanska. In practice that means more branches, a bigger ATM network and a stronger capital base for financing large corporate and infrastructure projects.

That is the version in the press release, and it is not untrue. It is just half of it.

The other half is that with every such merger the market has one player fewer. When four or five banks hold everything, competition on interest rates, fees and loan terms does not get sharper - it gets more comfortable for the banks. The Macedonian banking sector was not exactly famous for fighting over customers with better terms even before this.

The next step is regulatory approval. Until then nothing is final. But if it goes through, the question for the person paying a monthly instalment will not be how many shares the Austrians bought - it will be how many banks are left to compare.