THE Bank of Cyprus said yesterday it had concluded the acquisition of 80 per cent in Russia’s Uniastrum Bank for $576 million (€447m) as part of its expansion strategy abroad.
The bank said the acquisition was completed after regulatory approval from the central banks of Cyprus and Russia and the Russian Federal Antimonopoly Service.
The buyout is the most important step Bank of Cyprus has taken since deciding to expand into Greece in 1991. According to a press release, it is also the largest investment into the Russian banking sector by a financial institution operating in either Greece or Cyprus.
“The acquisition is funded by existing Bank of Cyprus capital. After its completion BoC’s capital adequacy will stand at 11 per cent. The transaction is expected to be earning accretive from 2009 and return on investment will top 10 per cent in two years,” BoC said.
Uniastrum founding shareholders Georgy Piskov and Gagik Zakarian will continue to serve as general director and president and will each maintain 10 per cent stakes, BoC said.
With the addition of Uniastrum the Bank of Cyprus group will number a regional network of 550 branches in Cyprus, Greece, Russia, Romania, Ukraine, United Kingdom and Australia.
Uniastrum, established in 1994, is headquartered in Moscow and has a network of more than 220 branches. At end September it had total loans of €1.1 billion and an equal amount of deposits, BoC said.
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 per cent. The real GDP growth rate for Russia is estimated at 7.0 per cent for 2008 and 5.5 per cent for 2009, which despite demonstrating a certain level of slowdown is still well in excess of the growth rates estimated for the euro zone (1.3 per cent for 2008 and 0.2 per cent for 2009).
Founded in 1994 and headquartered in Moscow, Uniastrum Bank has one of the largest distribution networks in Russia, consisting of over 220 outlets.
The Chairman of the Board of Directors of the Bank of Cyprus Group, Theodoros Aristodemou said yesterday that “the acquisition of Uniastrum Bank is in line with our strategy to expand in new emerging markets”.
The Chief Executive Officer of the Bank of Cyprus Group, Andreas Eliades, referred to the growth potential of the Group in Russia and said “the successful acquisition of Uniastrum Bank is a major step in the implementation of our strategy for strengthening our footprint in our targeted markets”.
