Foreign banks in Ukraine. Expectations and reality

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Erste Bank, Austria, in Ukraine

Ukrainian financial market always attract reckless adventurers. It is quite right to say that if you have basic capital, you can double your money quick in this country. Ukraine is the state of big risk and prortionally big possibilities to players. That`s why numerous European banks had been still in abundance after crisis 2008. But in 2014 many things would be revised, I afraid. That`s not profitably to be on the Ukrainian market since now.

Banking institutions are changing signboards. Famous international brands disappear from the streets of Ukrainian cities. Market discusses new deals and new rumors – possible purchase Marfin Bank's own DeltaBank Nikolay Lagun and cooking the sale of Platinum Bank. It seems that the expansion of Western capital in the Ukrainian financial market fails. And this is even without sanctions which strike on Russian banks in Ukraine

Western banks in Ukraine

Problems of Western banks who left Ukraine after the 2008 crisis, as like as two peas in a pod. The general formula which suits most of the stories is follow: before the crisis the banks have paid dearly to local businessmen, in the crisis have suffered record losses due to bad loans surfaced suddenly, after the crisis returned to their daughters for a knockdown price again to Ukrainian businessmen. Capital flows, which were flowing into Ukraine from Western banking groups, now turned back. Western bankers still have not learned to work in Ukraine.

 

Who eventually left in scoring? International banking business, which came at the peak and leaves, and not pushed from the bottom, suffered record losses. Ukrainian financial group easy pick what before the crisis was sold for a record price. Now will have to wait at least 5-10 years for a successful environment for the next best resale. The most vivid and dramatic episodes associated with the arrival and departure of the western banks of Ukraine listed below

 

SEB Bank (Sweden) 

An amount of $ 27.5 million, which in 2004 was paid for Bank Agio investor from Sweden Skandinaviska Enskilda Banken (SEB), is not impressive compared to the Ukrainian owners of successful sales years. However, the deal is a landmark. After all, for foreign banking groups, conquering in Ukraine, it was the first "trial balloon." The owner of Bank Agio, Stanislav Arzhevitin, after the sale of their offspring went into politics and for two convocations represented in the Verkhovna Rada party "Our Ukraine". 

bank, SEB, sweden, in Ukraine

Swedes decided not to stay on the purchase of a bank of Arzhevitin  and in 2008 joined their Ukrainian daughter Factorial Bank, the purchase of which has been spent already $ 120 million. In 2011, SEB Group acquires a third structure in Ukraine: the newly created Bank Acceptance. Then the expert community could not find an explanation for such a move. But a year later intrigue resolved: Acceptance Bank, renamed SEB Corporate Bank, became a kind of springboard for the Swedes to retreat. There were withdrawn assets of several international clients-legal persons with which the bank operates to this day. A retail business SEB Bank, together with the entire branch network was sold to the former head of UkrSibbank Alexander Adarich. Amount of the transaction was not disclosed, but the expert community it estimated at $ 25-30. Next SEB Bank was renamed to Fidobank. 

 

Bank Forum Commerzbank (Germany) 

According to experts, the German banking concern Commerzbank poured into the development of its Ukrainian subsidiary about $ 1 billion. In 2007, 60% of the shares of the financial institution Germans paid Ukrainian billionaire Leonid Yurushev 435 million Euros (about $ 600 million), And in 2010 bought the former Property remaining 26% stake. That same year, the bank's losses reached record levels of 3.282 billion UAH. 

Commerzbank, Germany, in Ukraine

In 2012, the bank bought the Forum businessman Vadim Novinsky, owner of the group companies Smart Holding. By the time of the sale of the institution of the top ten NBU assets slipped to 24 position. Amount of the transaction was not disclosed. But the expert community acquisition Novinskiy overall no more than $ 80-150 million. 

Swedbank (Sweden) 

In the first half of 2013 international banking group Swedbank (Sweden) put an end to their business in Ukraine. In the statements of the bank in "discontinued operations" was reflected in the amount of 340 million of Swedish kronor (about $ 52 million.), the proceeds from the sale of assets. This is 14 times less than the amount spent on the purchase of the banking group of Tigipko. The new owner was a collector of cheap ukraisnkih banks, the owner of Delta Bank Nikolay Lagun. Swedbank now renamed the Omega Bank, which occupies the 59th place in the ranking of the NBU on assets. 

 

Recall that in Ukraine Swedish bankers came in 2007, having bought at Tigipko TAS-Commerzbank and TAS-Investment for $ 735 million., Which corresponds to the volume of the five regulatory capital. Both banks were merged under the name Swedbank. 

 

In 2009, due to the provision for bad loans Swedbank suffered losses of 4.3 billion. UAH., In 2011, abandoned the development of retail and in 2013 finally went out of business. Reminder of the Ukraine for the Swedish Bankers is offered for sale on the real estate portfolio of 600 million Swedish kronor (about $ 92 million.). 

Erste Bank, Erste Group (Austria) 

Austrian banking group Erste Group was entering to Ukraine with great caution. The first step was the acquisition of 50.5% in the bank Prestige for $ 35.3 million. Such investment seemed beneficial to Austrians and a few months after the first transaction in 2006, Erste Group bought the remaining stake. However, for 49.5% had to pay $ 104 million. Indeed appetites of sellers increased. 

Erste Bank, Austria, in Ukraine

Ukrainian subsidiary of Erste quite successfully resisted the impact of the crisis. However, the parent company decided to concentrate business in the euro area and prefer to get rid of Ukrainian asset, registering losses. As a result, the bank that held the 29th place in the ranking of the NBU, for $ 83 million was sold to Alexander Adarich – owner of Fidobank (former SEB Bank). Now Erste Bank changed its signboard on Fidokombank and soon to be merged with Fidobank. 

Creditprombank 

The history of financial institutions is complicated and messy. Initially, the bank owned by the enigmatic Ukrainian businessman, Victor Nusenkis. Then half the business suddenly became eligible to former Prosecutor General of Ukraine Gennady Vasilyev. The result of the court (and not only) dispute was the sale of 48% stake in the financial institution pool of 28 foreign investors, including, in particular, the EBRD, Raiffeisen Int., Commerzbank and Cargill. More precisely, it was not really for sale, new shareholders entered in the capital for the debt in the amount of $ 400 million. 

Creditprombank, in Ukraine

The result of the ongoing struggle for ownership between Ukrainian beneficiaries was the deterioration of the bank's market position, customer`s outflow and the need to recapitalize financial institutions. Apparently, the desire to pour extra money into their (and for someone, maybe not his) offspring in domestic owners was absent. As a result, the NBU patience snapped and the regulator ordered the shareholders or capitalize the bank, or to sell. State of uncertainty did not last long. In late 2012, the owner of Delta Bank Nikolay Lagun bought Creditprombank for $ 1 (one dollar), together with debt. Despite the fact that the market capitalization of the bank amounted to about $ 1 billion. 

 

What to do next 

The list of fled from Ukraine foreign financial establishments, alas, does not end. Beginning 2009, our market had to leave the Czech Home Credit Bank (2009), Germany's Dresdner Bank (2009), Britain's HSBC (2010), the Russian Renaissance Capital (2010), Germany's Bayerische Landesbank (2011), South Korea's Kookmin Bank (2011), Georgia Bank of Georgia (2011), Dutch Credit Europe Bank retired from retail (2012), the Austrian Volksbank (2012), the French Societe Generale (2012), Creditprombank (2013) and Astra Bank (2013). In the near future, this list can fill Marfin Bank and Platinum Bank. 

 

Here you can see approximate situation in Ukrainian financial and banking system. Foreign capital is now running out from Ukraine, but local oligarchs are happy to buy foreign actives for a penny. They probably suppose they could restore the profit of structures in future. That`s a very complicated and foggy situation, especoally considering very "personal" compliance with the law in banking sector of Ukraine. Banks can transfer from hand to hand, has some features in documents that differ from reality and can be raided or whatever. Ukraine isn`t stable state and somebody wants to use it in their material profit.

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