KIEV, June 1 - Raiffeisen International Bank-Holding, the largest foreign lender in the former Soviet Union, said Thursday it had agreed to sell one of its Ukrainian banks for 650 million euros to OTP of Hungary.
The deal, which ends three months of talks, was reached after the Hungarian bank had agreed to dramatically increase the price highlighting its eagerness to enter the Ukrainian market.
The deal, which is yet to be approved by regulators in Hungary and Ukraine, is the latest in a wave of high-profile acquisitions of local banks by foreign banks.
It will bring to 12 the number of foreign banks operating in Ukraine with OTP joining the ranks of BNP Paribas, Credit Agricole, Calyon Bank, ING Bank, Citibank and others that have set their foothold in the country.
Raiffeisen, which currently owns two banks in Ukraine, has been selling a smaller bank, Raiffeisenbank Ukraine, or RBU, after realizing that costs of its merger with a bigger unit, Raiffeisen Bank Aval, would be significant.
Raiffeisen acquired 93.5% in Aval Bank, Ukraine‚Äôs No. 2 bank in terms of assets, for about $1.03 billion in October 2005, seeking to expand on a robustly growing segment of retail banking.
RBU, Ukraine‚Äôs No. 7 bank by assets, was launched by Raiffeisen in 1998 and had been mostly focusing on corporate clients, but last year expanded to control 5% of the mortgage market. RBU controls $1.47 billion in assets and operates 39 branches.
In U.S. dollar terms, OTP has agreed to pay about $835 million for RBU, which is a 67% premium to $500 million that had been apparently originally discussed between the banks, according to an industry source.
However, on May 10 Raiffeisen suddenly announced it was postponing the sell-off until the end of May, apparently indicating the talks with OTP have stalled over the price.
‚ÄúThe Hungarians overpaid at least $150 million,‚ÄĚ Vyacheslav Yutkin, the president of NRB-Ukraine, a subsidiary of a big Russian bank, told Kommersant daily. ‚ÄúThey take a big risk,‚ÄĚ he said suggesting RBU‚Äôs clients may switch their accounts to Raiffeisen Bank Aval.
OTP, which controls 19.8 billion euros in assets, has been quickly expanding in Eastern Europe and now has branches in Bulgaria, Croatia, Romania, Serbia and Slovakia. The bank reported more than 600 million euros in profits last year.
OTP has earlier this year unsuccessfully tried to buy two other big Ukrainian banks, UkrSotsBank and UkrSibbank, and most recently had been also studying books of TAS-Kommertsbank.
UkrSotsBank is now being acquired by Banca Intesa of Italy, while the 51% stake in UkrSibbank has been purchased by BNP Paribas.
Following the acquisition of Aval Bank, Raiffeisen has more than doubled its branches in Eastern Europe over the past year to 2,000. Earlier this year it agreed to buy Russia's Impexbank to become that country's largest non-Russian lender. (tl/ez)