Vienna-based Raiffeisen International Bank-Holding AG has acquired a majority stake of 93.5% in the Joint Stock Post Pension Bank Aval (Bank Aval), the second-largest Ukrainian bank, for an undisclosed amount.
Herbert Stepic, CEO of Raiffeisen International, said, “Ukraine is one of the most important markets for us. With this acquisition Raiffeisen becomes the Number 1 in the country. Bank Aval has a sound economic basis and an outstanding branch network throughout the country. It fits perfectly to our existing Raiffeisenbank.”
Bank Aval was founded in March 1992. By the end of 2004, it had total assets of € 1,573 million and earned a profit before tax of € 38 million. Its return on equity before tax was 32.6 per cent. The bank employed a staff of almost 17,950 and had approximately 1,380 outlets at the end of 2004. Via its subsidiary JSBC Raiffeisenbank Ukraine Raiffeisen International has been operating in Ukraine since 1998. With total assets of € 627 million as of December 2004 (plus 40 per cent compared to the end of 2003) it was the country’s seventh largest bank, employing at the end of June a staff of nearly 1,000 in 22 outlets. Together both banks will form the largest banking group in Ukraine, their combined share in the market’s total banking assets amounted to 11.5 per cent at the year-end 2004 (as of 1 July, 2005: 11.9 per cent).
“Raiffeisen is known for its pioneer spirit and its long-term commitment. We have proven several times that we are a driving force of market innovation. By bringing in the know-how that we gained across the region we will strengthen our leading position in Ukraine,” said Stepic. He also added that Raiffeisen International intends to keep the two local banks separate for the time being and merge them later on.”
According to recently-published data about the banking industry in Central and Eastern Europe, Raiffeisen International can expect significant growth rates in its main business segments – corporate and particularly retail banking. Whereas the real growth in the Ukrainian economy in 2004 was 12 per cent, banking sector assets grew by 30 per cent to € 19.6 billion. The growth potential for retail banking in Ukraine becomes obvious when one compares the volume of lending to private customers with GDP. For the Eurozone this ratio is on average about 50 per cent and in Ukraine it is only 4.5 per cent.
“This growth potential reflects the late start of the retail banking business in Ukraine and the entire Commonwealth of Independent States,” explained Stepic. “Since 1999, we have systematically increased our efforts and regional coverage in the retail business. Today we already serve more than 5.6 million retail customers in the region”, Stepic added. With the purchase of Bank Aval this figure will increase by some 3 million additional clients. Bank Aval’s client base in the corporate business amounts to 210,000. By the end of 2004, Raiffeisenbank Ukraine was serving 1,400 corporate and 26,000 retail clients.