Ukrainian-born Leonid Yurushev, a Greek national, has sold a 60 percent stake in Forum Bank to Germany’s Commerzbank
Ukraine’s banking market continues attracting foreign investments, with another two foreign banks announcing acquisitions of Ukrainian domestic banks, one of which ranks as one of the country’s top 10 banks.
German-based Commerzbank paid $600 million to acquire a majority interest of just over a 60 percent stake in privately-owned Forum bank, Ukraine’s number 10 bank in terms of assets. It also secured the option to buy another 25 percent stake of the bank after 36 months. Details of the acquisition were made public on Sept. 18.
The purchase marks the first acquisition of a domestic Ukrainian bank by a leading German-based bank.
Commerzbank said it plans to finance the transaction through existing financial resources.
“After an intensive search, we have found an ideal complement for our network of operational outlets in the booming region of Central and Eastern Europe in the form of Bank Forum,” said Martin Blessing, a member of Commerzbank’s Board of Managing Directors responsible for Mittlestand banking (SME customers). “This represents another step in our strategy of selective acquisitions to grow within our target regions,” he added.
Before its acquisition of Forum, Commerzbank operated in Ukraine through a representative office in Kyiv. Central and Eastern Europe have been key markets for the bank, with subsidiaries in Moscow and Budapest, and branches in Bratislava, Brno, and Prague, as well as a subsidiary bank in Poland. In the Balkan states and some other small, regional countries, Commerzbank has stakes in the local ProCredit Banks.
Blessing said they intend to significantly increase Forum’s retail customer business. Over the next four years the bank plans to increase its branches to 400 while doubling its market share.
Established in 1994, Forum bank currently has assets totaling the equivalent of nearly $2 billion, with a market share of 2.3 percent. Its clientele includes 12,000 corporate customers, with 9,500 being small- and medium-sized enterprises, constituting roughly two thirds of Forum’s customer base. Nearly 85 percent of the bank’s shares were owned by Ukrainian-born Greek-national Leonid Yurushev and his family.
Forum employs roughly 3,100 employees in its 230 branches that serve approximately 230,000 retail customers across Ukraine.
Greeks buy International
In another deal, Piraeus Bank of Greece recently purchased a 99.6 percent stake in the mid-sized International Commercial Bank for $75.3 million.
While the agreement had initially been signed on May 18 of this year, the completion of the acquisition was announced on Sept. 13, following approval from Greek and Ukrainian regulators. Kyiv-based private equity firm Dragon Capital acted as the Greek bank’s financial advisor in the transaction.
According to a statement issued by Piraeus bank, they have a banking presence in seven other foreign countries, including Romania, Bulgaria, Serbia, Egypt, the UK and the US, with 413 branches and representative offices. Piraeus Bank Group’s total assets abroad amount to 6.3 billion euros, employing over 5,140 people.
As of July 2007, International Commercial Bank ranked 73rd in assets, with $153 million, while its equity amounted to $15.6 million. Established in 1994, the bank has 133 branches in 38 cities around the country. It serves around 25,000 customers and employs 910 people throughout Ukraine.
Foreigners target top-ten banks
The two consecutive purchases are indicative of the considerable interest of foreign banks in both large and smaller-sized domestic Ukrainian banks. In the past several years, foreign banking groups have increased their market share in Ukraine through acquisitions from below 10 percent to about 30 percent. However, the percentage of Ukraine’s banking system owned by foreign shareholders is still relatively low compared to its more Western-oriented neighbors, Hungary, Slovakia and Poland, owning only 29 percent.
As the first German bank to gain an operational presence in Ukraine, Commerzbank joins foreign financial institutions from France, Italy, Czech Republic, Hungary, Russia, and Georgia who have over the past several years entered Ukraine’s banking market with the acquisition of domestic banks.
Nearly half of Ukraine’s top 10 banks are now owned by foreign shareholders. The top twenty banks in Ukraine account for about half of the country’s banking market. While the number of banks in the country numbers around 150, most of the banks work as pocket-banks for Ukrainian business groups.
Ukraine’s bank market has seen strong growth rates in recent years, with bank assets growing by an average rate of 50 percent over the past five years.
