Ukraine’s Pravex-Bank for €504 million, a month after main rival
UniCredit completed a deal to acquire Ukraine’s Ukrsotsbank.
Intesa’s Ukrainian purchase follows the release of a new business
plan designed to grow the proportion of its profit generated in
Central and Eastern Europe.
Less than a month after announcing it was actively looking for
growth opportunities in the Eastern and Southern European markets,
particularly in Ukraine and Turkey, Intesa Sanpaolo, Italy’s
second-largest bank by market capitalisation, has agreed to buy 100
percent of Ukraine’s JSC Pravex-Bank (Pravex) for €504 million
($747 million) plus an adjustment based on the Ukrainian bank’s net
book value.
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Intesa expects the deal to be completed in the next few months,
subject to the approval of the Italian and Ukrainian
authorities.
The move, if completed, will come as a sharp relief to the Italian
bank. Intesa tried but failed to purchase Ukraine’s Ukrsotsbank in
a protracted €1.53 billion deal which lasted almost a year – in the
end, the acquisition was blocked by Ukraine’s central bank in April
2007.
To make matters worse, Intesa’s main domestic rival, UniCredit, via
its Austrian arm Bank-Austria Creditanstalt, subsequently acquired
a 94.2 percent stake in Ukrsotsbank in a €1.5 billion deal. The
deal concluded on 23 January this year.
As of 31 December 2007, Ukrsotsbank was the fourth-largest bank in
Ukraine by net customer loans (€3.2 billion, up 68 percent over
2006, representing a market share of 5.8 percent). The bank had
total assets of approximately €4.2 billion.
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By GlobalData“The acquisition reinforces UniCredit Group’s operations in
Ukraine, one of the fastest-growing economies in the region, where
the group already operates through UniCredit Bank,” UniCredit
said.
The top five banks in the country as measured by assets are now
PrivatBank, Bank Aval, Oschadny Bank, Ukrsotsbank and Nadra
Bank.
Sixth-largest network in Ukraine
Pravex has a retail banking network of 560 branches, the
sixth-largest in Ukraine, with over 2,000 point-of-sale consumer
finance kiosks in major commercial retails chains, and about 280
ATMs.
The bank offers personal and auto loans, mortgages and revolving
credit cards. It is one of the three major Ukrainian providers of
point-of-sale consumer finance with approximately 1.2 million
people on its books. At the end of June 2007, the bank had total
assets of approximately $1 billion, customer loans of $587 million
and deposits of around $592 million, according to Intesa.
“With this acquisition, Intesa Sanpaolo continues implementing its
strategy of selective expansion in Central and South-Eastern Europe
(CSEE) and the Mediterranean basin,” the bank said in a
statement.
Intesa’s purchase of Pravex highlights again the growing number of
international financial groups setting up shop in Ukraine. A flurry
of acquisitions during the course of the past three years has
increased foreign banks share of net assets from below 10 percent
to more than 35 percent. Assets in the Ukrainian banking market
have grown at an average rate of more than 50 percent over the past
five years, driven by a fast-growing economy.
However, market penetration of banking services is still
comparatively low, leading to significant growth potential.
Further international investment
Further international investment seems assured, with Ukrainian
media reports suggesting that Kreditprombank has been targeted by
France’s Société Générale (SocGen), and two Greek banks, National
Bank of Greece and Piraeus – though SocGen’s domestic scandal
(see “SocGen tries to remain independent”) may result in
it pulling out of a possible deal.
Other retail banks considered takeover candidates in the next 12 to
15 months are said to include Rodovid, Ukrgazbank and
Megabank.
Last year, Skandinaviska Enskilda Banken (SEB), Sweden’s
second-largest bank by assets, expanded its presence in the country
by acquiring 97.25 percent of Ukraine’s Factorial Bank for around
$116 million (see RBI 582). SEB was the first Nordic bank
to enter Ukraine in 2004 when it acquired Bank Agio, which it
rebranded as SEB Ukraine.
Also in 2007, Germany’s Commerzbank acquired a majority interest of
60 percent plus one share in Bank Forum, Ukraine’s tenth-largest
bank by assets, for €435 million, priced at around 3.9 times book
value.
The deals by Intesa and UniCredit hark back to 2005 and 2006 when a
number of European banking groups made a succession of frenzied
bids for banks in Ukraine (see RBI 555). Hungary’s OTP,
Austria’s Raiffeisen International and France’s Crédit Agricole all
made acquisitions in the country – Raiffeisen subsequently sold its
Ukrainian subsidiary Bank Aval at a hefty profit.
For Intesa, Ukraine is yet another market to add to its substantial
Central and Eastern European (CEE) franchise. It has an established
presence in Croatia, Bosnia and Herzegovina, Serbia, Albania,
Romania, Slovenia, Hungary, the Republic of Slovakia, the Czech
Republic, Greece and the Russian Federation. As at 30 September
2007, the CEE division served 7.2 million customers through 1,234
branches and posted operating income of €1.4 billion, up 22 percent
year-on-year.
While Intesa is the largest Italian retail bank by any measure, its
current international activities account for only around 15 percent
of the bank’s earnings. But the bank wants this to grow, and
quickly.
At a presentation in Vienna on 14 January discussing the bank’s
plans for the region, senior Intesa executives set out targets for
CSEE to 2009, including: a 13.7 percent CAGR in operating income; a
rise in income before tax (up 15.9 percent CAGR); and a 4.7
percentage point decrease in the cost-income ratio (see RBI
585).
Co-ordinated brand image
The presentation in Vienna included the unveiling of a new
co-ordinated brand image that will unify all of the group’s
international banks. The names of subsidiaries will remain
unchanged but have been restyled with the colours, the lettering
and the logo of the group.
“The rebranding project is aimed at ensuring that international
subsidiary banks are immediately recognised as part of a large
international group and, consequently, underlining the shared
identity, with its distinctive values and styles – those of the
entire Intesa Sanpaolo Group,” said the bank in a statement.
In January this year, Intesa Sanpaolo agreed to buy the 41 percent
of Italy’s CariFirenze it does not already own for €2.29 billion.
It has also confirmed that it is to take part in the privatisation
of Libya’s fourth-largest bank, Wahda Bank.
