Erste Bank der oesterreichischen Sparkassen AG (Erste Bank) has signed a share purchase agreement (SPA) to acquire 9.8% of the outstanding share capital of Bank Centre-Invest from existing shareholders. In line with the SPA Erste Bank will nominate one member to the supervisory board. At the request of the existing shareholders, the pricing of the transaction remains confidential; the acquisition will have no material impact on Erste Banks capital ratios. Closing of the transaction and transfer of the shares is expected in July 2008.
Bank Center-Invest is a regional bank in the Southern Federal District of Russia, which is home to nearly 23 million inhabitants and major cities such as Rostov, Krasnodar, Volgograd and Sochi. The region which borders Ukraine and the Black Sea in the west and covers 591,000 km2, is considered one of the most economically diversified regions in Russia, with limited reliance on the oil and gas industry and particular strength in agriculture.
Founded in 1992, Bank Centre-Invest is headquartered in Rostov, employs approx 2,000 staff and has the second largest branch network (110 branches) in the Southern Federal District. Its total asset market share in the region is about 6%. At year-end 2007, total assets amounted to EUR 1.1 billion and shareholders equity to EUR 145 million. At the same time ROE stood at 15% and the cost/income ratio was 55%.
This strategic investment in Bank Centre-Invest provides an ideal opportunity for Erste Bank to gain first-hand experience of the highly promising Russian market and more importantly, is in a region that complements Erste Banks existing geographic footprint. In addition, the banks strong orientation towards transparency and corporate governance as well as its young but experienced management team has been one of the key determining factors for the investment decision.
The bank has a diversified ownership structure, which includes respected international financial institutions; apart from the founding Vysokov family who own 17.9% of the bank, EBRD (27.5%) and DEG -Deutsche Investitions- und Entwicklungs Gesellschaft (22.5%) are the largest shareholders.