Banking Spree in Russia – At Full Swing

THIS POST WAS ORIGINALLY PUBLISHED JULY 31, 2007

Banking Spree in Russia – At Full Swing

In my earlier post this month I mentioned that there is a definite indication of desire of foreign banks in M&A activity here in Russia. It seems that July is very active month in this. Today Vedomosti Daily published a commentary regarding acquisition of Russian and Ukrainian banks by foreign entities. This is based on the study of Dresdner Kleinwort showing that in the Ukraine foreign entities own about 47% of national assets, while in Russia this number is 10%. Here is a part of the table from the publication that represent the Russian side:

Russian Bank (Equity Per Cent)	Buyer	Transaction Value/ Valuation of the Bank	Capital Multiplier
Delta Credit (100%)	Societe Generale (OTC:SCGLY)	$105M/$105M	2.4
IMPEXBANK (100%)	Raifeissen Zentral Bank (WBAG:RIBH)	$563M/$563M	2.8
Investsberbank (96.4%)	OTP Bank (BDP:OTP)	$478M/$495M	3.8
Rosbank (50%+1)	Societe Generale (OTC:SCGLY)	$2,334M/$4,668M	3-4.3
Orgresbank (75%)	Nordea (STO:NDA)	$314M/418M	3.3
Promsvyazbank (15.3%)	Commerzbank (OTC:CRZBY)	$104M/$680M	n/a
Absolut Bank (95%)	KBC (EBR:KBC)	$1,035M/$1,089M	3.5-3.8
Average multiplier 3.5

Also some hot news of this week:

• The British direct investment fund Aurora Russia has completed the second stage of the purchase of a stake in Unistream Bank, a subsidiary of Uniastrum Bank that specializes in money transfers. During the first stage of the purchase in April 2007, Aurora Russia acquired a 17.7% stake in Unistream for $13.6 million, After receiving permission from the Central Bank of Russia to acquire more than 20% of the bank, the fund acquired another 8.3% interest in the bank for $6.3 million. Uniastrum Bank was Russia's 48th largest bank by assets at the end of the first quarter of 2007, according to the Interfax-100 ranking.
• Firebird investment fund acquired 10% of small Russian SOTSGORBANK through a Cyprus-based subsidiary. 10% were sold for about $10M. As of Q1 2007 SOTSGORBANK was placed as to its assets at No.167 in RosBuisnessConsulting rating of the banks. Firebird Investment already owns equity in Russian regional banks: 8.7% of Center-invest Bank, 10% of SDM-BANK and 10% of NBD-Bank.
• KBC Group (EBR:KBC) formally closed the transaction of acquisition of Absolut Bank at the end of last week with the finale stake of 95% (after buying 7.5% from IFC)
• IFC is buying additional equity issue ($ 184.99 M) of MDM Bank