ECONOMY

Entering Ukraine

Piraeus Bank, Greece’s fourth-largest lender, is buying a bank in Ukraine as part of its expansion strategy into Southeast Europe, a senior executive said yesterday. «We are signing a deal in Ukraine in a matter of days,» John Kyriakopoulos, deputy general manager and head of international operations at Piraeus, told Reuters in an interview. «The acquisition will form the platform to establish our initial presence in such a promising market. It will be a majority stake,» he said. Kyriakopoulos would not name the bank but said it had a network of 16 branches and 120 sub-branches, along with a loan book of about $150 million. Market watchers said the description matched Ukraine’s International Commerce Bank, but Kyriakopoulos would not confirm it. «Piraeus has accumulated experience in the markets of Bulgaria, Romania, Serbia and Albania, and moving into Ukraine is mostly applying our model,» he said. Ukraine’s underpenetrated banking market has been on the radar screen of other Greek lenders. EFG Eurobank has acquired Universal Bank, while Marfin Popular bought Marine Transport Bank earlier this year. National Bank and Alpha Bank have also been exploring the terrain in Ukraine, but no deals have yet emerged. Drawn by steady economic growth, rising incomes and low credit penetration, foreign banks have been flocking to Ukraine. Other buyers include Scandinavian group Swedbank, Austria’s Raiffeisenbank, Italy’s Intesa and France’s BNP Paribas. «It is a cautious first step in Ukraine; multiples are high, about 4.5 to 5 times book value,» Kyriakopoulos said. «The Ukraine economy is growing at a rate of more than 6 percent and is very much underpenetrated in terms of consumer credit.» He said sustainable economic growth, the presence of major European banks and an improving legal framework should help increase access to financing for the country’s population of 47 million. As part of its recently unveiled business plan, Piraeus Bank projects its overall network will grow to 900 branches by 2010. The group’s network outside Greece should expand to 580 branches from 243 currently. «Where our expansion is accelerating is in Romania. We are building up a network that will exceed 100 branches by the end of 2007 from 54 last year,» Kyriakopoulos said. «In Egypt we continue to grow organically, targeting 55 branches from 41 now.» Kyriakopoulos said international expansion made obvious business sense for Greek banks, moving to tap growth opportunities in the relatively underbanked neighboring region.»Looking at lending, the (Greek banks’) market share in the Balkans has grown to about 20.5 percent,» he said. (Reuters)