Raiffeisen buys Polbank from Eurobank at cut price

Raiffeisen Bank International AG, Eastern Europe?s third-biggest lender, on Monday completed the purchase of Eurobank EFG?s Polish unit for a lower price than when the deal was announced a year ago.

Raiffeisen paid 460 million euros for a 70 percent stake in Eurobank?s Polbank, 30 million euros less than agreed in February 2011, the Vienna-based lender said in a statement.

The price is 1.5 times Polbank?s book value, less than the 1.7 agreed when the deal was announced. That could drop further, depending on Polbank?s equity as of the closing date today, Raiffeisen said.

The Polbank acquisition makes Raiffeisen one of the biggest lenders in Eastern Europe?s largest economy, and the unit will become the bank?s biggest foreign division by assets after Russia. Eurobank will sell its 13 percent stake in the combined company to Raiffeisen for at least 175 million euros, Athens-based Eurobank said in a separate statement, giving Raiffeisen full ownership of Raiffeisen Polbank.

Raiffeisen is gradually taking over the 2 billion euros of loans Eurobank provided to Polbank, which has funded its 5.23-billion-euro loan book only partly with deposits. Eurobank, which has suffered a ?substantial reduction? in deposits at home as Greek savers withdrew funds, will be repaid 1 billion euros in funding immediately, a Raiffeisen spokeswoman, Ingrid Krenn-Ditz, said by e-mail. Raiffeisen will take over another 1 billion euros once it completes the acquisition of the remaining 13 percent stake from Eurobank. [Bloomberg]