RBC. Igor Kim's Expobank has agreed to acquire a Russian subsidiary of Royal Bank of Scotland, and the transaction price could equal half of its capital.
A source familiar with the details of the transaction told RBC that Expobank is going to buy Royal Bank of Scotland Bank (100% owned by RBS). Expobank management board chairman Kirill Nifontov also confirmed information.
"Indeed, we have entered into an agreement to purchase 100% of Royal Bank of Scotland Bank," he said, noting settlements would be made later upon receipt of all required approvals.
According to him, the deal is advantageous as the bank generates profit and it holds quality assets plus guarantees, which are typical for transactions of this kind, from the parent company. He named no transaction price.
Corporate business models that are executed by Russia-based RBS and Expobank are similar, Nifontov added. "We plan to expand our client base using operations carried out by the RBS subsidiary. Longer term, the bank and Expobank will merge," he specified.
"The market value of banks that operate in Russia declined conspicuously as banking licenses are revoked en masse, so the transaction price may have been modest and equal half of capital," IFCMarkets analyst Dmitry Lukashov thinks.
RBS said that it would leave the Russian market at the beginning of 2015. In February, the second-largest British lender said that it would wind down operation in 25 countries in Central and Eastern Europe, the Middle East and Africa, including Russia. The banking group's strategy ran that it would focus its resources on the regions where it holds firm leadership positions and sees the widest potential for growth going forward.
The bank pays the piper for its previous ambitions to become a global investment bank. Right now more radical measures are necessary so that RBS becomes a reliable investment for its shareholders, The Wall Street Journal wrote quoting RBS CEO Ross McEwan as saying. Last year the bank suffered a loss of $5.39 bln.
Russia-based RBS primarily serves foreign companies with business interest in Russia, and also arranges syndicated loans and trade finance for Russian corporate borrowers. The bulk of the bank's liabilities falls to funds held on corporate accounts.
