Raiffeisen International Bank-Holding AG (Raiffeisen International) hasclosed the acquisition of Joint Stock Post Pension Bank Aval (BankAval), the second-largest bank in Ukraine, as scheduled. All necessaryapprovals by the anti-monopoly authorities and the National Banks inUkraine and Austria were obtained. The purchase price for the 93.5 percent stake was USD 1.028 billion.
"Bank Aval is the leading retail bank in Ukraine. It fits perfectly intoour strategy with its superior position in the retail business", saidHerbert Stepic, CEO of Raiffeisen International, at a news conference inKiev. Not only is the acquisition a milestone in RaiffeisenInternational''s history, but also a positive signal to internationalinvestors with interesed in Ukraine. Raiffeisen International intends togrow above all in retail banking and the countries of the CIS.
Bank Aval operates a country-wide network of 1,400 business outlets andserves more than 3 million customers, increasing RaiffeisenInternational’s number of branches to 2,400 and the number of customers to 9.2 million in Central and Eastern European (CEE).
Number 1 in growth market
"This acquisition makes us the leading bank in Ukraine, one of the mostpromising banking markets in the growth region of Central and EasternEurope", Stepic added. Together, Bank Aval and Raiffeisenbank reach amarket share 11.5 per cent by total assets, forming the largest bankinggroup in this market of 50 million people. The banking market in Ukrainegrows significantly: In 2004, the local banks'' aggregated total assetsincreased by 30 per cent to€ 19.6 billion.
The Ukrainian banking market is expected to continue to expand strongly,especially in the retail business. Rising incomes and thereforeincreasing prosperity will pave the way for products that are onlymarginally present in Ukraine today. According to current research, thecredit card business should grow by 38 per cent per year until 2010,which would result in a market almost seven times larger by then. Autoloans should increase by 34 per cent and mortgage financing even by 56per cent per year.
Integration main task for next year
"For the next one or two years, the integration of Bank Aval will be ourmain task", Stepic said. The transformation phase is scheduled for 18 to24 months. During this time, back office functions will be bundledstep-by-step and IT-systems will be harmonized."For the time being,both banks will concentrate on their respective strengths– Raiffeisenbank on the corporate business and Bank Aval on the retail business. We consider a full merger not earlier than 2007 or 2008",Stepic emphasized.
The anticipated cost-synergy effects will amount to€ 5 million per year from 2008 onwards."Our primary reason for this acquisition was notcost-synergy. Our reasons are the strong market position of Bank Aval,the superior distribution network and the good economic performance",Stepic explained.
Bank Aval and Raiffeisenbank with remarkable image values
In a survey conducted by the Center of Corporate Relations Studies inKiev in July 2005, Bank Aval and Raiffeisenbank were attested remarkabletrust values. Both banks lead the way with 75 per cent attributing trustto both banks. Another study conducted by Gesellschaft fuerKonsumforschung (GfK) on brand awareness in spring 2005, shows Bank Avalas the most popular banking brand in Ukraine. It reached remarkablevalues of more than 60 per cent in unaided recognition and almost 90 percent in aided recognition.
JSPP Bank Aval, Kiev was founded in 1992. At year-end 2004, its balancesheet-total amounted to€ 1,573 million and the profit before tax reached € 38 million. Return on Equity was 32.6 per cent. The bank operated some 1,380 business outlets with approximately 17,950 employees at the balance-sheet date.
Raiffeisen International is in charge of steering the subsidiaries ofRaiffeisen Zentralbank Oesterreich AG (RZB) in CEE. Its shares aretraded on the Vienna Stock Exchange. RZB owns 70 per cent. The balanceis free-float, including shareholdings of the International FinanceCorporation (IFC) and the European Bank for Reconstruction andDevelopment (EBRD) of about three per cent each. RaiffeisenInternational operates the leading banking network in CEE with 16subsidiary banks and numerous leasing companies in 16 markets. 9.2million customers are served via almost 2,400 business outlets (figuresincluding recently acquired Ukrainian Bank Aval).
Raiffeisen International''s balance-sheet total amounted to€ 32.9 billion at the end of June 2005, which was 14 per cent more than at year-end 2004. Pre-tax profit for the first semester was € 273.3 million, 58 per cent more than for the same period of the previous year.