Austrian based banking group Raiffeisen International may not merge its Ukrainian arm with recently purchased Aval Bank
Six months after Raiffeisen International bought the lion’s share in Ukraine’s Aval Bank for just over $1 billion, the Austrian-based banking group is now mulling the sale of its Raiffeisen Ukraine operation, which it initially said it would merge with Aval’s extensive network.
Last October, Raiffeisen International, a subsidiary of Raiffeisen Zentralbank Oesterreich AG, bought 93.5 percent of Aval Bank for $1.028 billion.
Raiffeisen Zentralbank Oesterreich is the central institution of Raiffeisen Banking Group, one of Austria’s largest banking groups. Its Ukrainian arm, Raiffeisenbank Ukraine, was established eight years ago and currently has 39 branches with total assets valued at more than 1.2 billion euros at the end of 2005.
Aval Bank is ranked number two among Ukrainian banks in terms of its net assets, which totaled Hr 19.2 billion ($3.84 billion) at the start of this year.
Together, both Aval and Raiffeisenbank Ukraine currently control about 10 percent of the Ukrainian banking market’s net assets.
Following Aval’s purchase by Raiffeisen International, the two banks tabled the possibility of merging Raiffeisenbank Ukraine with Aval, but the managing board of Raiffeisen International Bank-Holding AG, in a statement issued April 4, said that it has “decided to engage in negotiations which have arisen as a result of unsolicited approaches from third parties to sell 100 percent of the shares of Raiffeisenbank Ukraine.”
“Should the negotiations not come to a successful conclusion in several weeks, then a merger with Bank Aval, which was acquired in 2005, will take place,” the statement continued.
Raiffeisen International’s managing board said that the transaction to sell its Ukrainian operation “could generate a substantial extraordinary gain for the Raiffeisen International Group, reflecting a multiple of the book value of Raiffeisenbank Ukraine.”
The managing board also said that the sale of Raiffeisenbank Ukraine would eliminate merger costs with Aval Bank, which was purchased in 2005.
“Furthermore, it would be possible to speed up the transformation process. The Raiffeisen brand would not be included in the sale. Instead, it would be incorporated into the Bank Aval name.”
Raiffeisen International said that the Aval brand would be re-branded into Raiffeisen Bank Aval, with Raiffeisen International’s further expansion in the high-growth banking sector in Ukraine being continued via the new entity.
”After a possible sale [of Raiffeisenbank Ukraine], Raiffeisen Bank Aval would still play a leading role as the second largest bank on the Ukrainian market, with total assets of 3.4 billion euros and 1,342 branches,” Raiffeisen International said.
According to a number of Ukrainian news sources, Raiffeisenbank Ukraine’s new owner could become OTP Bank, Hungary’s largest bank with a 19.4 percent share of the Hungarian banking market. OTP stands for National Savings Bank, indicating OTP’s state origins.
In the last decade, OTP Bank has become a major player in the Central European market, with acquisitions in Slovakia (OTP Bank Slovensko), Bulgaria (DSK Bank), Romania (RoBank, renamed OTP Romania) and Croatia (Nova Banka, renamed OTP Banka).
Earlier, OTP Bank took part in talks for the purchase of two of Ukraine’s largest banks by net assets – Ukrsibbank and Ukrsotsbank – but the shareholders of the two banks rejected the Hungarian bank’s offers.
The Raiffeisen banking group’s purchase of Aval Bank last fall was followed by the sale of a 51 percent stake in Ukrsibbank to France’s PNB Paribas for about half a billion dollars.
In February, Italy’s Bank Intesa inked a deal to purchase more than 85 percent in Ukrsotsbank for just over $1 billion.
Smaller among the recent bank purchases in Ukraine was the sale of Mriya Bank to Russia’s state-owned Vneshtorgbank for $70 million.
At the end of March, France’s Credit Agricole, a major international financial and banking services company, signed an agreement with the shareholders of Ukraine’s Index Bank to acquire at least a 98 percent share in the bank.
Credit Agricole said that the price it agreed to pay for Index Bank values it at more than $255 million.
