Following the acquisition of JSC Impexbank, Raiffeisen InternationalBank-Holding AG is now not only the largest foreign banking group inRussia, but also the largest foreign banking group in the Commonwealthof Independent States (CIS). In February 2006, Raiffeisen Internationalhad announced the acquisition of 100 per cent of Impexbank. The deal wasclosed on 28 April and now finalised with a press conference in Moscow.
The purchase price for Impexbank amounts to at most USD 550 million plusa possible price adjustment arising from the revaluation of the futureheadquarters and will be paid in two tranches. The first tranche of USD500 million was paid on 28 April 2006. The second tranche of up to USD50 million will be due after submission of the certified 2006 financialstatements.
Among leading retail banks in Russia
Impexbank is one of the leading retail banks in Russia. As of 31December 2005, the bank showed total assets amounting to€ 1.6 billion (an increase of 55.8 per cent compared with year-end 2004) and a profit before tax of € 26.1 million (exceeding the 2004 result by 54.4 per cent). The number of employees amounted to 5,116. Based on assets, it ranks 21st on the Russian banking market. Impexbank is a universal bank with particular strength in retail and SME business. Customers are served through its nationwide distribution network of approximately 190 branches and offices as well as 350 consumer finance outlets.
"This acquisition makes us the leading western bank in Russia and putsus in the top league of retail banks in the country. Retail is the mostpromising banking market segment. We save at least four years of branchexpansion. In fast growing markets, time is of even greater value. Wewill use this time to attract new private and SME customers. Until 2008,we will increase our branch presence by 80 to a total of 300 coveringthe entire country", said Herbert Stepic, CEO of RaiffeisenInternational."We are especially content about the fact that thewell-respected management team of Impexbank stays on board and willcontinue to develop the bank with us."
"We were looking for a new owner of the bank in order to secure thecontinuation of our growth. Raiffeisen International has proven in thepast that they know well to build on the strengths of an organisation,therefore they are the ideal new owner", said Dmitry Eropkin, CEO andPresident of Impexbank.
Apart from Russia, Raiffeisen International has also a leading presencein the high growth banking markets of Belarus and Ukraine. Bank Aval andRaiffeisenbank Ukraine together form the largest banking group inUkraine, while Priorbank is the largest foreign-owned bank in Belarus asnumber three on the market. This makes Raiffeisen the largest westernbanking group in the CIS region with total assets of more than€ 10 billion. The second largest international banking group shows assets of approximately € 5 billion. In 2005, the CIS segment already contributed 27 per cent to Raiffeisen International''s profit before tax of € 568.6 million, and the trend goes up: In the first quarter of 2006, this share – which amounted to 19 per cent in 2002 – was already at 30 per cent.
Russia offers huge potential for Raiffeisen International
The Russian banking market is by far the largest in the growth region ofCentral and Eastern Europe (CEE). At the same time it is one of thefastest growing markets in the region, with total banking assetsexpanding by 56 per cent to€ 287 billion in 2005. Comparing total assets with GDP shows the market''s tremendous growth potential: While total assets account for about 80 per cent of GDP in the new EU-Member states of Central Europe, this ratio is only at 45 per cent in Russia. Especially retail banking is set to offer huge growth potential for the long-term future as more than 80 per cent of the Russian population do not own a bank account yet according to current research.
Raiffeisen International has been present in Russia since 1997 throughits subsidiary ZAO Raiffeisenbank Austria. Raiffeisenbank showed totalassets of€ 3.9 billion as of year-end 2005 (plus 87 per cent), making it Number 10 in the country with a total of 1,674 employees. It currently serves its customers via 32 business outlets in Moscow, St. Petersburg, Ekaterinburg, Samara, Novosibirsk, Chelyabinsk and Nizhniy Novgorod. Due to this structure, there are almost no overlaps with Impexbank branches.
With the acquisition of Impexbank, Raiffeisen is well-positioned at theforefront of retail banking development in Russia. Together, Impexbankand Raiffeisenbank will be No. 4 in the Russian retail loan market."With the countrywide branch-presence of Impexbank, we reach around 70per cent of the Russian population, which is a potential ofapproximately 100 million people. No other foreign owned bank has thispotential in Russia", Stepic said.
Legal and operational merger scheduled for 2007
The integration of Impexbank into Raiffeisen International''s network hasalready started: Project teams are working on integrating riskmanagement and treasury functions, introducing Raiffeisen InternationalGroup standards. Quick wins are expected in the areas of centralprocurement, centralisation of head and back-office functions and thecombination of cash transport, call centres and common clearing accountswith correspondent banks. Furthermore, a new common IT-architecture willbe implemented and a new organisational structure worked out. The futurebranding of the bank will be decided in the course of 2006."We willfully merge the two banks on legal and operational terms in 2007",Stepic said.
A new Supervisory Board for Impexbank has already been elected withsenior representatives from Raiffeisen International: Herbert Stepic(Chairman), Jeffrey Millikan (Deputy Chairman), Martin Gr?ll, HeinzWiedner and Aris Bogdaneris. Millikan is Regional Director for the CIS,all others are board members. Boris Ivanishvili complements the board.
Customers benefit from integration
Raiffeisen will quickly start to offer its products through theextensive branch network of Impexbank. As early as July 2006, Raiffeisenexpects to start selling its pension funds products through Impexbankbranches and consumer finance outlets in Moscow. Starting in August, itis planned to sell Raiffeisen Investment Funds nationwide viaImpexbank''s network.
Customers already benefit from the integration by gaining free access tothe combined ATM network of Impexbank (400 ATMs) and Raiffeisenbank(360) which started on 12 May.
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Raiffeisen International operates one of the leading banking networks inCEE with subsidiary banks and leasing companies in 16 markets. More than10 million customers are attended through approximately 2,700 businessoutlets. In seven markets, the respective Network Bank ranks among thethree largest local banks. Representative offices in Lithuania andMoldova complement the Group''s presence in the region. RaiffeisenInternational is a fully consolidated subsidiary of RaiffeisenZentralbank Osterreich AG (RZB), which owns 70 per cent of the commonstock. The remaining 30 per cent is free float, the shares are traded onthe Vienna Stock Exchange. RZB is a leading corporate and investmentbank in Austria and the central institution of the Austrian RaiffeisenBanking Group, the country''s largest banking group.
Raiffeisen International''s balance-sheet total amounted to€ 41.9 billion at the end of the first quarter 2006. Consolidated profit (after minorities) increased by 34 per cent to € 124 million, compared with the first quarter 2005.
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