March 18, 2018

How to profitably sell small bank

October 12, 2013    BanksРаспечатать эту статью

How to profitably sell small bank

To sell the bank on favorable terms possible during the crisis. It is important to know to whom it will be interesting . This principle was followed by the Russian group ” Renaissance “, which sold a small group of Ukrainian bank Rinat Akhmetov’s SCM in March last year. Conglomerate , which in 2010 made ​​a profit of $ 850 million , and could buy a large company. In this case, there were many vendors , as many Western banks sought to withdraw from the market of Ukraine. How did the ‘ Renaissance ‘ to sell his bank SCM ?

In 2010 was the year of the crisis of bad debts in the banking sector of Ukraine, and so many owners of banks were not ready to expand. And if in 2006-2008 it was possible to sell the bank for 3-7 of capital, which was at that time a record figure in the whole of Eastern Europe , then in 2010, the year to get even a single capital at the bank was very difficult. According to Greg Krasnov , CEO of Platinum Bank, then the average for the capital of the bank amounted to 0.2-1 and depended on the quality of the loan portfolio. In February 2011, Bank of Georgia has sold its 80% stake in a subsidiary in Ukraine, Donetsk investors for $ 9.6 million (representing 0.82 Capital Bank). ” Renesang ” does not include the amount obtained from the sale of the bank, but claims that this amount exceeded the bank’s capital . Bankers who know about the conditions of the deal, said the bank was valued at $ 31 million , which was 1.2 equity.

In 2005, the “Renaissance” is buying a small Ukrainian bank

The bank was renamed to Renaissance Capital , and its development proceeded on the basis of consumer loans. In the wake of the financial crisis, some operations were discontinued. As explained Tatiana Khondru , deputy chairman of the bank’s loan to Russian Renaissance , the owners felt that the investment dollars in Russia is much more profitable than in Ukraine.

Already in May 2010, the bank’s owners have started preparing for the transaction. Then the bank Renaissance Capital , which in terms of assets held 95th place, with a loan portfolio of $ 45 million , re- launched earlier frozen consumer credit program , but under the name ” Renaissance Credit” . At this time the SCM combined Donghorbank And Pumbaa belonging to her, and began searching for opportunities that would allow them to take a segment of consumer lending , capable before others recover from the crisis . According to Ilya Arkhipov, business development manager at SCM , the creation of such a trend in FUIB would take three years. And to save time , it was decided to buy a small bank specializing in consumer loans .

Sebastian Ruban, board chairman of Renaissance Credit , back in 2008, was interested in working with FUIB . At the time, his head was Rafal Juszczak . They discussed the possibility of a joint project in the field of consumer credit . But the joint project was never realized, because Juszczak soon left his post.

According Arkhipova, about the possibility of buying Renaissance Credit in SCM learned from colleagues in the market. In addition, SCM managers considered other sites for shopping , for example , Platinum Bank and Home Credit Bank ( HKB ) . But as the Platinum Bank was also looking for items to purchase, SCM and stopped at Renessense HKB with which negotiations began and quickly was performed their due diligence. As a result, HKB has sold Platinum Bank, and SCM has continued negotiations with the Renaissance . It remains only to establish the value of the bank. Representatives of the Renaissance began to extol its loan portfolio of high quality. During the 2009-2010 -ies the bank managed to sell distressed debt , which earned them 100 million UAH from the six collection companies . According Foul , while the share of problem loans , depending on the product and the bank was 15-50 %. With that , these figures were the best at the time. However, the SCM does not immediately believe the reports . FUIB then chose to err , since no experience in consumer credit , he did not. Then it was decided to give the money only after the closing of the transaction in case of defaults will increase dramatically , and degrade the quality of the loan portfolio.

Another argument is that the Renaissance deserves a higher price than the average at that time to market was a good team and new technologies. SCM agreed with this , but because the deal was struck.

After the sale Renesssansa Donetsk investors , its development took off . Arkhipov says , the very next day after the announcement of the transaction , many of his friends began calling him with questions about the possibility of opening deposit . True, we did not cater deposits , as cheaper resources for this can attract FUIB . Already in 2011 , the assets of Renaissance Credit rose to 40 %. The banking system growth rate was 12%. SCM did not change the state, but only extended it to 2,000 , up 67 % over the previous figure . According to Krasnov, Pumbaa is allowed to become a leader in consumer lending . The objectives have been achieved.

Moreover , the situation in the Renaissance would have been better if you would have delayed negotiations with the SCM for eight months. And while the negotiations were conducted on the transaction price, the Renaissance competitors offer consumers the most favorable conditions for cooperation. As a result of the Renaissance among the three major networks after the others on less favorable terms. Today the Renaissance behind the market leaders in consumer lending in the number of sales outlets in three times.

This means that the CCM will continue to buy up banks . To sell bank SCM ? According to Arkhipov to interest in buying the bank SCM , you must clearly demonstrate how the business will be able to add business Akhmetov , because not enough simply to increase its scale . At Renaissance Credit succeeded. And the price of such transaction shall be reasonable.