EBRD plans to purchase stocks of Russia's Kazanskiy Bank

Updated July 14, 2008

   European Bank for Reconstruction and Development (EBRD) plans to purchase 28,25% stocks of Kazanskiy Bank due to current stocks purchase and participation in additional issue. EBRD directors’ board approved this project on June, 25. Russia Partners, direct investment fund, acts as co-investor; it was established by the American Siguler Guff & Company to invest in assets in Russia and the CIS countries.

   Talks about stockholding sale of Kazanskiy Bank started in May this year, when it became known that the top-management took control over the credit organization. Chairman of Kazanskiy board Takhir Gaynutdinov and his deputies have increased their stocks’ stake by 99,1% directly and through controlled structures, having bought securities up at individuals. The largest deal of last year was the purchase of 19,83% of JSC Kazan Motor Production Association stocks (KMPO). Then Kazanskiy Bank that owned 21% of KMPO stocks left the enterprise stockholding structure.

   Kazanskiy Bank was established in June, 1994. Its primary founders were JSC KMPO and JSC Concern Izhmash, and its authorized capital totaled RUR 500 million. In 2007 net income totaled RUR 142,2 million. Profitability - 12,61%, assets amount - RUR 9,7 billion, lending volume - RUR 5,6 billion. According to last year results, the bank increased the balance sheet profit by 68% to RUR 142 million, and lending volumes grew by 46%.

   We will mark that Kazanskiy stocks’ purchase is the second EBRD analogical purchase in Tatarstan. In May last year, the European bank closed a deal of 28,25% stake purchase in CJCB Spurt (JSC) at the bank stockholders. Then, chairman of CJCB Spurt board Yevgeniya Dautova declared that new strategy of the bank development had been elaborated, taking into account powerful international corporation appearance among the bank stockholders. The strategy envisages development of the bank all sectors: lending of private businessmen and small companies, services rendering to corporate customers, retail business.

   If earlier EBRD activity was directed to the Central European countries mainly that had quite recently joined the EU (since its foundation the bank had invested €9,3 billion there), now its interests moved to the Eastern Europe, as well as to Central Asia and Caucasus. In the nearest future EBRD is going to invest considerable means in Russia also: by 2010, its stake in the total investments’ volume totals more than 40%. The bank intends to establish two new representative offices there and to increase personnel number twice. Within the last couple of years EBRD purchased blocking stockholdings of NBD Bank in Nizhniy Novgorod, Uraltransbank in Yekaterinburg, Sibacadembank (now URSA Bank) in Novosibirsk and Bank Centr-Invest in Rostov-on-Don.

   Not only EBRD is interested in stable regional banks - in February, 2008 the Bulgarian holding Himimport has declared about deal completion of 92% consolidation of the Kazan TatInvestBank. The public holding is engaged in stakes purchase, reconstruction, and management of branches and portfolios of different companies.

Expert comments

Polina Lazich, AK BARS Finance Investment Company analyst

   Purchase procedure of stockholdings in small regional banks with retail networks by foreign banks became obvious lately. And the notorious bank crisis does not hinder here. The current Russia’s banking system does not correspond the Russian economy size by the scales, the banks can develop, therefore they are a very attractive asset. Foreign investors prefer regional banks exactly, as they can influence the policy and strategy. Such partnership is favorable for the Russian banks, as they can get new technologies and products, and they are rendered support in development.