ΤΡΑΠΕΖΑ ΚΥΠΡΟΥ Δ.Ε.Λ.
Completion of the acquisition of UNIASTRUM BANK in Russia
Bank of Cyprus announces that it has successfully completed the acquisition of an 80% interest in Uniastrum Bank in Russia for a total consideration of US$576 mn (euro 447mn). The acquisition represents the largest investment into the Russian banking sector by a financial institution operating in either Greece or Cyprus. The transaction was completed following the receipt of approvals from the Cypriot and Russian Central Banks as well as the Russian Federal Antimonopoly Service.
The purchase consideration is financed from Bank of Cyprus' existing capital and liquidity resources. Following the acquisition, the capital adequacy ratio of the Group is expected to be 11%. The transaction is expected to be earnings accretive from the first full year of investment (2009) and achieve a return on investment in excess of 10% within two years (2010).
The two founding shareholders - George Piskov and Gagik Zakarian remain in their capacities as Chairman and President of Uniastrum Bank respectively, and will each retain a 10% interest in Uniastrum Bank, whereas the new board of directors is controlled by Bank of Cyprus. This residual shareholding is subject to a put/call arrangement over a three-year period, payable in cash, depending on the financial performance of Uniastrum Bank during the three-year period.
Russia, with its underpenetrated banking sector and relatively strong economic growth, offers significant potential for development of banking services, especially in retail banking. The average real GDP growth of Russia for the period 2004-2007 was 7,3%. The real GDP growth rate for Russia is estimated at 7,0% for 2008 and 5,5% for 2009, which despite demonstrating a certain level of slowdown is still in excess of the growth rates estimated for the Eurozone (1,3% for 2008 and 0,2% for 2009). Banking penetration in Russia is still at its infancy, with the loans to GDP ratio at end-2007 at only 36,3% compared to 113,9% in the Eurozone, with the spreads between loans and deposits significantly higher than those prevailing in the Eurozone.
Uniastrum Bank is well positioned to capture this Russian retail banking potential. Founded in 1994 and headquartered in Moscow, Uniastrum Bank has one of the largest distribution networks in Russia, consisting of over 220 outlets. The network is located in the most economically active regions in Russia, which account for approximately 85% of the country's GDP and the Bank operates in every city with an official population of over 600,000 people. Uniastrum Bank has a retail focused portfolio offering an extensive range of products and enjoys high brand recognition in the regions in which it is active. As of June 2008, Uniastrum was ranked 36th by retail loans. The Bank has an excellent deposit gathering capability and is ranked 15th by retail deposits. As of September 30, 2008, Uniastrum's total assets stood at euro 1,4bn, net customer loans at euro 1,1bn and customer deposits at euro 1,1bn. The closing of the transaction is coupled with a $50mn (euro 38mn) capital increase, which will further strengthen the capital adequacy of Uniastrum Bank, which as of 30 September 2008 stood at 12,5%. The capital injection will support the future envisaged growth of the Βank. In addition to its attractive fundamentals, Uniastrum Bank has a highly experienced management team with demonstrated capability to manage a rapidly growing organization.
Uniastrum Bank will continue to focus on the lucrative retail and SME sectors, and will complement Bank of Cyprus' existing organic operations in Russia, which focus on the corporate sector. It is expected that Uniastrum Bank's retail focus and extensive distribution network in Moscow and throughout Russia coupled with Bank of Cyprus' product developement capabilities, procurement support and funding synergies will add significant value to the shareholders of Bank of Cyprus.
With the addition of Uniastrum Bank to the Group, Bank of Cyprus will operate a well-diversified network of over 550 outlets in Cyprus, Greece, Russia, Romania, Ukraine, the United Kingdom and Australia.
On the occasion of the successful closing of the transaction, the Chairman of the Board of Directors of the Bank of Cyprus Group, Mr Theodoros Aristodemou stated:
"The Bank of Cyprus Group, strong and financially sound, with a history of 110 years, took a major step forward today. The acquisition of Uniastrum Bank is in line with our strategy to expand in new emerging markets. Uniastrum Bank is well positioned in the Russian market to exploit any opportunities that may arise. The addition of Uniastrum Bank strengthens further the Group even more and its opportunity to become a powerful regional banking institution, aiming at enhancing shareholder value".
The Chief Executive Officer of the Bank of Cyprus Group, Mr Andreas Eliades, referred to the growth potential of the Group in Russia and stated: "The successful acquisition of Uniastrum Bank is a major step in the implementation of our strategy for strengthening our footprint in our targeted markets. Uniastrum adds an exciting dimension to our entrenched position in Cyprus and Greece. The strong deposit base and the increased capital base of Uniastrum allow it to self fund its asset growth utilising its extensive branch network. Uniastrum's focus on the retail and SME sectors ideally complements our existing corporate focused presence in the country."
Notes:
1. Α detailed presentation relating to the completion for the acquisition of Uniastrum Bank will be posted on the Group's website www.bankofcyprus.com (Investor Relations/Presentations).
The purchase consideration is financed from Bank of Cyprus' existing capital and liquidity resources. Following the acquisition, the capital adequacy ratio of the Group is expected to be 11%. The transaction is expected to be earnings accretive from the first full year of investment (2009) and achieve a return on investment in excess of 10% within two years (2010).
The two founding shareholders - George Piskov and Gagik Zakarian remain in their capacities as Chairman and President of Uniastrum Bank respectively, and will each retain a 10% interest in Uniastrum Bank, whereas the new board of directors is controlled by Bank of Cyprus. This residual shareholding is subject to a put/call arrangement over a three-year period, payable in cash, depending on the financial performance of Uniastrum Bank during the three-year period.
Russia, with its underpenetrated banking sector and relatively strong economic growth, offers significant potential for development of banking services, especially in retail banking. The average real GDP growth of Russia for the period 2004-2007 was 7,3%. The real GDP growth rate for Russia is estimated at 7,0% for 2008 and 5,5% for 2009, which despite demonstrating a certain level of slowdown is still in excess of the growth rates estimated for the Eurozone (1,3% for 2008 and 0,2% for 2009). Banking penetration in Russia is still at its infancy, with the loans to GDP ratio at end-2007 at only 36,3% compared to 113,9% in the Eurozone, with the spreads between loans and deposits significantly higher than those prevailing in the Eurozone.
Uniastrum Bank is well positioned to capture this Russian retail banking potential. Founded in 1994 and headquartered in Moscow, Uniastrum Bank has one of the largest distribution networks in Russia, consisting of over 220 outlets. The network is located in the most economically active regions in Russia, which account for approximately 85% of the country's GDP and the Bank operates in every city with an official population of over 600,000 people. Uniastrum Bank has a retail focused portfolio offering an extensive range of products and enjoys high brand recognition in the regions in which it is active. As of June 2008, Uniastrum was ranked 36th by retail loans. The Bank has an excellent deposit gathering capability and is ranked 15th by retail deposits. As of September 30, 2008, Uniastrum's total assets stood at euro 1,4bn, net customer loans at euro 1,1bn and customer deposits at euro 1,1bn. The closing of the transaction is coupled with a $50mn (euro 38mn) capital increase, which will further strengthen the capital adequacy of Uniastrum Bank, which as of 30 September 2008 stood at 12,5%. The capital injection will support the future envisaged growth of the Βank. In addition to its attractive fundamentals, Uniastrum Bank has a highly experienced management team with demonstrated capability to manage a rapidly growing organization.
Uniastrum Bank will continue to focus on the lucrative retail and SME sectors, and will complement Bank of Cyprus' existing organic operations in Russia, which focus on the corporate sector. It is expected that Uniastrum Bank's retail focus and extensive distribution network in Moscow and throughout Russia coupled with Bank of Cyprus' product developement capabilities, procurement support and funding synergies will add significant value to the shareholders of Bank of Cyprus.
With the addition of Uniastrum Bank to the Group, Bank of Cyprus will operate a well-diversified network of over 550 outlets in Cyprus, Greece, Russia, Romania, Ukraine, the United Kingdom and Australia.
On the occasion of the successful closing of the transaction, the Chairman of the Board of Directors of the Bank of Cyprus Group, Mr Theodoros Aristodemou stated:
"The Bank of Cyprus Group, strong and financially sound, with a history of 110 years, took a major step forward today. The acquisition of Uniastrum Bank is in line with our strategy to expand in new emerging markets. Uniastrum Bank is well positioned in the Russian market to exploit any opportunities that may arise. The addition of Uniastrum Bank strengthens further the Group even more and its opportunity to become a powerful regional banking institution, aiming at enhancing shareholder value".
The Chief Executive Officer of the Bank of Cyprus Group, Mr Andreas Eliades, referred to the growth potential of the Group in Russia and stated: "The successful acquisition of Uniastrum Bank is a major step in the implementation of our strategy for strengthening our footprint in our targeted markets. Uniastrum adds an exciting dimension to our entrenched position in Cyprus and Greece. The strong deposit base and the increased capital base of Uniastrum allow it to self fund its asset growth utilising its extensive branch network. Uniastrum's focus on the retail and SME sectors ideally complements our existing corporate focused presence in the country."
Notes:
1. Α detailed presentation relating to the completion for the acquisition of Uniastrum Bank will be posted on the Group's website www.bankofcyprus.com (Investor Relations/Presentations).