KOMMERSANT. International Finance Corporation (IFC) plans to buy a stake in the merged bank, Bank Otkritie, the business daily wrote with reference to the web site of IFC. Investments could total up to $100 mln and this could be the entry into both the lender’s tier one capital and additional capital. This project will be discussed on June 15, IFC said in a press release. “The project has just been announced and negotiations between IFC and Otkritie Financial Corporate are in progress," IFC told the newspaper adding usually IFC’s investment horizon, if it provides a subordinated loan in the banking sector, is five to seven years. If IFC buys into the bank, this will be a minority stake, but it’s early to talk about its size.
The talks between Otkritie Financial Corporation and IFC began three months ago, Otkritie Financial Corporation CEO Mikhail Belyaev specified. According to him, $100 mln is the ceiling and it cannot be ruled out that the transaction price will be lower, but if proceeding from the highest amount of investment, IFC could grab up to 20% of the merged bank. “The aggregate capital of the banks that will merge in October (calculated in line with Form 134) was equal to Rub 13.9 bln as of May 1," Belyaev said adding the lender plans to boost capital to Rub 15 bln by the end of the year. Experts believe that if IFC buys into the bank as a shareholder (i.e. if it provides money for the tier one capital) it will hardly assess the bank with the equity multiple higher than 1.
IFC is a development institution and is part of the World Bank, a minority shareholder of a number of Russian banks, namely MDM-Bank (3.6%) and Absolut Bank (5%).
Otkritie Financial Corporation rehabilitated Russian Development Bank (it was renamed in Bank Otkritie, owns 100%) and Bank Petrovsky (former Bank EEFC, 25%). By October 2010 Otkritie Financial Corporation plans to bring its banking assets under one roof. The corporation acquired these assets during the rehabilitation procedure. Otkritie Financial Corporation is the sole rehabilitation agent of Russian Development Bank. In October 2008 Bank EEFC was rescued by the Deposit Insurance Agency (DIA), four months later Otkritie Financial Corporation and Nomos-Bank joined holding 25% stakes each. Nomos-Bank plans to sell its interest to Otkritie Financial Corporation and DIA will gain 17% of the merged bank.
Although at first sight IFC’s entry into the project to consolidate the troubled lenders looks risky, its risks are minimized by state participation in the merged bank’s capital, Interfax-CEA analyst Alexei Buzdalin noted. Vice president of auditing firm FBC Alexei Terekhov believes that it should be borne in mind that DIA not only bought into Bank Petrovsky, but also purchased the latter’s troubled assets worth Rub 50 bln in early 2010.
During the crisis IFC virtually made no investment in the Russian banking sector. Since autumn 2008 only two deals have been transacted: the acquisition of a 10% interest in Asian-Pacific Bank and a 20%-1 share stake in Bank South Region. Alexei Buzdalin thinks IFC’s investment in Bank Otkritie will be a success: in the near future retail lending (the merged bank’s core area of business) will turn into the primary catalyst of growth.
