Raiffeisen International Bank-Holding AG (Raiffeisen International) acquires 100 per cent of Russian JSC Impexbank subject to the approval of the transaction by the Central Bank of Russia and relevant authorities in Russia and Austria. An agreement was signed between both parties in Vienna last night. The acquisition marks an acceleration of Raiffeisen International’s existing retail strategy in Russia. With this acquisition, Raiffeisen International, a member of RZB Group, will become the largest foreign-owned banking group in Russia.
Successful retail bank with strong countrywide branch network
Impexbank was founded in 1993 and is owned by seven Russian companies. Its business focus is primarily on retail customers who are served through its nationwide distribution network of approximately 190 branches and offices as well as 350 consumer finance outlets. As of 30 June 2005, the bank showed total assets amounting to € 1.2 billion, a net income of € 9.0 million and it employed 4,320 people.
”This acquisition substantially enhances our market presence both regionally as well as with our target customer groups. With the strong regional presence of Impexbank in Russia we will stop our own ambitious branch expansion programme. We can now fully focus on attracting new retail and SME customers in the entire country”, said Herbert Stepic, CEO of Raiffeisen International.
Purchase price: In the range of maximal USD 550 million
Raiffeisen International will pay the purchase price in two tranches. The first tranche of up to USD 500 million will be due upon presentation of the audited financial results of 2005. The second tranche of up to USD 50 million will be payable upon presentation of the audited financial results 2006. This results in a maximal purchase price of USD 550 million (plus a possible price adjustment resulting from the revaluation of a real-estate asset) for the full acquisition of Impexbank. “This acquisition is, due to the small overlap in the branch networks, commercially as well as strategically highly valuable for us. We save a minimum of four years versus organic branch development in Russia”, Martin Grüll, CFO of Raiffeisen International, added.
Consequent focus on high-growth countries
The Russian banking market is by far the largest in Central and Eastern Europe (CEE). From January until October 2005, the market grew by 39 per cent in Euro-terms to € 263 billion in total assets. Comparing total assets with GDP shows the market’s tremendous growth potential. While total assets account for 78.1 per cent of GDP in the new EU-Member states of Central Europe, this ratio is only at 42.5 per cent in Russia. Especially the business with private individuals and small and medium-sized enterprises (SME) shows high growth rates.
Largest foreign-owned banking group in Russia
With the acquisition of Impexbank Raiffeisen International becomes the largest foreign-owned banking group in Russia. Together, Raiffeisenbank and Impexbank will form the seventh largest bank in this market of 143 million inhabitants. The Russian banking market is highly concentrated and fragmented at the same time. More than 1,500 banks are registered in the country, while the Top Five accounted for 46.9 per cent of total banking assets at the end of 2004.
Raiffeisen International has been present in Russia since 1997 through its subsidiary ZAO Raiffeisenbank Austria. Raiffeisenbank showed total assets of € 3.0 billion as of 30 June 2005, placing it at Number 10 in the country. At the time the bank employed 1,312 people and operated 23 business outlets.
Raiffeisenbank has made its mark in the Russian corporate finance market through a series of debut transactions. It syndicated the first unsecured transaction to a non-state company for the leading retail chain Pyaterochka with a value of RUB 1.5 billion (approximately € 42.5 million). The financial magazine Global Finance has awarded Raiffeisenbank as “Best Syndicated Loans Arranger in Russia” in 2003 and 2005.
The expansion of its regional presence to Yekaterinburg, Novosibirsk and Samara has brought Raiffeisenbank numerous new customers in corporate and retail banking. The latter has seen almost a doubling of customer numbers to more than 200,000. As of 30 June 2005, the private loan portfolio exceeded USD 500 million. In October, the retail deposit volume surpassed the mark of USD 1 billion and the bank had issued 250,000 debit and credit cards.
Ninth successful acquisition since 2000
The purchase of Impexbank is Raiffeisen International’s ninth acquisition since 2000. “We have shown and proven in the past that we are capable of integrating new units into the group swiftly and smoothly. This is also underlined by the current transformation process in Ukraine. We have acquired Bank Aval not even six months ago and we are well on time, this will also be the case with Impexbank”, Stepic added.
