Austria’s Raiffaisen banking group has decided to rename Bank Aval, as it announces plans to possibly sell Raiffaisenbank Ukraine
The Vienna-based banking group also appears close to selling its other Ukrainian banking operation, Raiffeisenbank Ukraine, to Hungary’s OTP bank, which has been eager to enter Ukraine’s promising banking market.
At an April 21 shareholders’ meeting, the Austrian bank announced it would rename Bank Aval, ranked as Ukraine’s third largest Ukrainian bank in terms of net assets ($3.76 billion) and branch network size, to Raiffeisen Bank Aval.
Leonid Zyabrev, a spokesperson at Bank Aval, said his bank would officially be renamed soon, once Ukraine’s central bank approves the decision.
The Ukrainian owners of Bank Aval, which currently has more than 1,400 branch offices throughout Ukraine, sold their controlling stake in the bank last fall to Raiffeisen. It was the first time one of Ukraine’s largest banks was sold to a major European banking group. A series of other sales of large Ukrainian banks followed, transferring control of nearly a quarter of Ukraine’s banking market to European banking groups. More sales are expected to follow this year.
Ukraine has more than 150 banks, though the top 10 control nearly half of the country’s traditional banking market. The rest largely serve as so-called pocket banks for Ukrainian business groups, though they have in recent years attempted to diversify their clientele base in an effort to transform themselves into stable, Western-style banking operations.
One of the next sales of a large Ukrainian bank could very well involve Raiffeisen once again. The Austrian bank announced in early April that it might sell its other Ukrainian bank, Raiffeisenbank Ukraine.
The Austrian banking group had earlier expressed its intention to merge Raiffeisenbank Ukraine, ranked as Ukraine’s seventh largest bank in terms of net assets (nearly $1.5 billion), with Aval. Founded in 1998, Raiffeisenbank Ukraine was the largest European-owned banking operation in Ukraine, with a strong corporate client base, but a small country network compared to Aval, with only 39 branch offices.
Insiders claim that Hungary’s OTP Bank is another European bank eyeing a possible acquisition of Raiffeisenbank Ukraine.
In an interview this week with Biznes, a weekly Ukrainian business magazine, Serhiy Buriak, chairman of the parliament’s banking and finance committee, said that OTP has already reached an agreement with Raiffeisen to buy the bank.
Buriak, who along with his brother, owns a majority stake in another Ukrainian bank that is reportedly up for sale, Brokbiznesbank, said OTP agreed to pay about $500 million for Raiffeisenbank Ukraine’s operation.
As of April 26, Raiffeisen and OTP bank officials had neither confirmed nor denied Buriak’s words. Raiffeisen bank officials had earlier claimed they would make a final decision on whether to sell Raiffeisenbank Ukraine or merge it with Aval by May 11.
Emese Bartha, a spokesperson for OTP, said that as a publicly listed company, her bank would inform investors of any move that would affect its share price in line with regulations. She added, however, that OTP is very interested in expanding into Ukraine.
“OTP Bank’s acquisition strategy focuses on those countries in Central and Eastern Europe whose economies and banking sectors develop at a pace above the regional average or have significant growth potential,” she said.
“Ukraine is a key target country in the foreign bank acquisition strategy of the leading Hungarian bank. “[Ukraine] offers significant growth potential compared with both the Hungarian and European Union levels,” she said, adding that overall balance sheets in Ukraine’s banking sector rose by an annual average of 37 percent in the past five years.
In an April 24 statement, Raiffeisen International CEO Herbert Stepic attributed his bank’s successful initial public offering, which was conducted last year, to its ability to take “the right step at the right time,” pointing to the group’s expansion in Eastern Europe, including its acquisition of Aval, as a prime example.
“With the acquisition of Ukrainian Bank Aval and the recent purchase of Russian Impexbank, we are very well positioned in two key markets to utilize great long-term growth potential,” Stepic said.
Raiffeisen International, the Austrian banking group’s principle banking arm, operates one of the leading banking networks in Central and Eastern Europe, with 16 subsidiary banks and leasing companies in 16 markets. The group claims to service more than 10 million customers through 2,400 business outlets. Raiffeisen International is a fully consolidated subsidiary of Raiffeisen Zentralbank Osterreich AG (RZB), which owns 70 percent of its common stock. The remaining 30 percent is free floated. The shares are traded on the Vienna Stock Exchange.
