Greek bank selects investment object in Ukraine

declaration of intent

As Kommersant has learned, the Greek bank Marfin Popular Bank PCL is completing a deal to purchase a bank in Ukraine for $200 million. Bankers name four possible acquisition targets and note that the specified amount is only enough to purchase a small financial institution without a branch network. In their opinion, Marfin is buying the bank for little money in order to have a platform for further development, because Greek financial institutions that intended to acquire a large bank have not yet entered the Ukrainian market.

Last week, the press service of Marfin Bank told Kommersant that a deal to purchase a Ukrainian financial institution, the name of which has not yet been disclosed, will be completed in the near future. At the same time, Marfin states that they intend to pay $200 million for the Ukrainian bank. “We are entering Ukraine because we are interested in the Ukrainian banking market. We are considering all options that suit us in price, but we can slightly increase the cost if the offer will be very attractive,” the bank told Kommersant. At the same time, Marfin notes: “The more branches the bank has, the better for us.” It is planned that after the purchase, the Ukrainian financial institution will be involved in retail and corporate banking.

It is curious that Marfin, which intends to absorb one of the Ukrainian banks, recently itself could become the target of a hostile takeover by Greek banks. According to Marfin, they previously sent a purchase offer to the Greek Piraeus Bank SA, which immediately made a reciprocal takeover offer. Piraeus valued the bank at 3.45 billion euros, offering one of its shares for every 5.7 shares of Marfin. After this, Marfin stopped negotiations with Piraeus. And on March 14, due to the lack of a quorum, the meeting of shareholders of Piraeus Bank was disrupted, which automatically means its refusal to take over Marfin Bank.

Marfin Popular Bank PCL (Cyprus) was formed in 2006 as a result of the merger of the Cyprus Popular Bank with the Greek financial groups Marfin and Egnatia Bank. According to Marfin Popular Bank, as of January 1, 2006, the bank's assets amounted to 22.6 billion euros, capital - 3.1 billion euros, profit - 396.6 million euros. Branch network - 312 branches. The bank is represented in 12 countries.

A source close to the transaction told Kommersant that the Greek bank would not buy a large financial institution. “Marfin is quite young, so in Ukraine he will buy a bank after the second twenty. It will be some kind of average bank,” says Kommersant’s interlocutor. Bankers note that $200 million is enough to purchase only a small financial institution without a network. “If they want to engage in serious business, they will buy a bank with a developed branch network. And if they intend to create a modern, technologically advanced bank, then they need to buy a medium-sized bank, since modernizing a large bank is a very complex process,” explained the deputy chairman of the board of VAB Bank. Petr Pereverzev. “But in a small bank you will have to develop a branch network, which is also very expensive.”

Among possible takeover targets, experts name Imexbank, Bank Kiev, Megabank and Marine Transport Bank (MTB). Almost all of the listed financial institutions told Kommersant that they are not negotiating with Marfin, and MTB declined to comment. “Theoretically, the sale of MTB is possible,” says Vladimir Yatsenko, First Deputy Chairman of the Board of PrivatBank. “This is a pretty good bank; they can ask for $200 million for it.” It should be noted that with an average sales multiplier in Ukraine of four capitals, the cost of MTB as of January 1, 2007 was $106-110 million.

According to bankers, Marfin's intention to acquire a Ukrainian bank from the medium-sized category is due to the desire not to overpay for the purchase. “Investors are inclined to believe that it is worth waiting and not risking their money,” says Sergei Borisov, Deputy Chairman of the Board of Finance and Credit Bank. “Large banks have already been purchased, capital multipliers are very high, and no one wants to pay the coefficients that were. Investors want to buy banks for relatively little money to grow the business." Let us recall that Greek financial institutions that intended to buy a large Ukrainian bank have not yet entered the market: the National Bank of Greece, which negotiated with Forum and Kreditprombank, abandoned its intention to buy a bank in Ukraine (see Kommersant on February 23), and Alpha Bank is still negotiating with Kreditprombank. Currently, only the Greek Eurobank is present in Ukraine, which bought the Universal bank for approximately $50 million (in the AUB rating as of February 1, 2007, it occupied 69th place in terms of assets).

Experts fear that due to the overheating of the Ukrainian banking market, foreign shareholders may completely suspend investments in Ukraine. “Two years ago, investors were optimistic about emerging markets, but when problems began with the world’s stock markets, everyone’s ardor cooled down a little,” said Sergei Borisov. “The seven-year recovery cycle that began in Ukraine in 2000 is ending. Some foreign banks already intend to leave Russia and Ukraine."

ELENA Kommersant-Gubar

Marfin doesn't know what to do with $200 million