Largest bank in Georgia moves forward with plans to expand onto the fast-growing Ukrainian market through small bank acquisition
The largest bank in the tiny Caucasus country of Georgia is moving forward with plans to expand onto the larger and fast-growing Ukrainian market by acquiring a smaller bank headquartered in Kyiv.
The National Bank of Georgia has been in talks to acquire Kyiv’s Universal Bank of Development and Partnership, but just received approval this week from Ukraine’s central bank to close the $28 million purchase.
The deal is small compared to the billion-dollar purchases made in Ukraine within the past two years by European banking groups that have snapped up the country’s largest banks. But the arrival of Georgia’s leading bank signals that interest in Ukraine’s fast-growing banking market is strong across the globe.
According to sources and reports, a leading Korean bank, Kookmin Bank, is in talks to acquire a small Ukrainian bank, Transbank.
Earlier this year, Turkey’s Garanti Bank, itself part-owned by America’s General Electric, announced it had engaged in talks to buy a bank in Ukraine.
Ukraine’s banking market has grown swiftly in recent years. Analysts say Ukraine, a country with a population of 46 million, which is only beginning to tap into classical banking services, offers foreign banking groups one of the best growth opportunities worldwide, particularly in retail banking.
Foreign banking groups, mostly from Europe and Russia, have rushed onto the Ukrainian market within the past two years through merger and acquisition deals and Greenfield investments.
The presence of foreign banking groups has, as a result, increased within the period from about 10 percent to more than a third of the Ukrainian banking sector. Analysts predict that 45 percent of the country’s banking market could be controlled by foreign financial groups by year’s end.
While many of Ukraine’s largest banks have been sold, the country is home to more than 150 banks, many of which have served as so-called pocket banks for business groups in the past decade.
While their small size does not offer an immediate strong market position, the purchase of smaller banks offers foreign groups an instant management team and a chance to avoid the bureaucratic process of applying with regulators for the permissions needed to set up a bank from scratch.
