Russian Banking Tempest

THIS POST WAS ORIGINALLY PUBLISHED APRIL 19, 2007

Russian Banking Tempest

All news media and financing community are discussing today yesterday’s announcement of the biggest ever transaction in Russian banking history – acquisition of Moscow-based ABSOLUT bank by the Belgian KBC financial group. The group valued the bank at $ 925 million. It is the first time in Russian history that a bank has been sold for such a high price. (The transaction should be approved by the Russian antimonopoly service and is estimated to be closed sometime in the third quarter of this year). Actually, KBC will get 92.5% of bank’s equity, while they expect the remaining 7.5% to be bought from IFC very soon.

According to INTERFAX agency, as of April 1st 2007 ABSOLUT bank had assets of 1.8 billion Euros and owned capital of 200 million Euros – which places the bank in 25th position in overall Russian banks (more than 1,100,000) rating. Five individuals are shareholders of the bank.

This event shows the growth interest of world financial community to the Russian banking system. When we look back at historical data, we may find that in 2006 only :
-Austrian Raiffeisenbank acquired IMPEXBANK $ 550 million;
-Hungarian OTB Bank bought 96.4% of INVESTSBERBANK $ 477 million
-Deutsche Bank – 60% of UFG $450 million
-French Societe Generale – 10% of ROSBANK $ 317 million
-Nordea Bank Finland – 85.7% of ORGRES Bank for $313.7 million
-Morgan Stanley – 100% of the GORODSKOY IPOTECHNY BANK for $ 200 million
-German Commerzbank – 15.32% of PROMSVYAZBANK $ 95 million.

Thus Russian banking sector seems to be extremely popular. Now we see emerging trend for the banking IPOs. Just this week we learned about new plans(adding to earlier announcements about ZENIT, NOMOS and GAZPROMBANK):
- KIT FINANCE – mulls listing on MICEX this summer with possibility of LSE listing in 2008
- KHANTY-MANSIYSK BANK – may be the first regional Russian bank that will go public. This was announced during discussion of EBRR and IFC plans to acquire 25% plus two shares of the bank