Last Monday, Swedbank completed the deal announced in February giving it control of TAS-Kommerzbank, one of Ukraine’s largest banks. The acquisition cost Swedbank USD 735 million, including an equity increase of USD 50 million to TAS with an additional payment of USD 250 million being due in three years, subject to performance.
“The acquisition of TAS falls in line with Swedbank’s strategy for expansion in Eastern Europe, where the bank is already the market leader in the Baltic States. Strong growth is expected in Ukraine and there is currently a low penetration of financial services,” Jan Liden, CEO of Swedbank explains.
TAS-Kommerzbank welcomes the deal, recognising that Swedbank has a lot to offer the Ukrainian market. “Attracting this foreign investor which has excellent international experience and is a market leader in Scandinavia will significantly strengthen the position of our bank in the domestic finance market. We have already launched the process of integration into the Swedbank system,” says Sergiy Tigipko, CEO and owner of TAS-Kommerzbank, and a former governor of Ukraine’s central bank who has also served as Ukraine’s economy minister and vice prime minister.
The successful Swedbank deal comes after the collapse of negotiations by the National Bank of Greece (NBG) to acquire TAS-Kommerzbank. Executives from the Athens-headquartered bank, the largest in Greece, announced plans last autumn to target TAS for acquisition, but NBG soured on the deal, citing an inflated price tag as the main reason.
Swedbank is currently the market leader in the Baltic countries and is developing operations in Russia. It has approximately 17,000 employees, 8.9 million retail customers and 459,000 corporate customers in Sweden, Estonia, Lithuania and Latvia. In Sweden the group has more than 470 branches, with another 290 branches in the Baltics. The group has a presence in Copenhagen, Helsinki, Kaliningrad, Kyiv, Luxembourg, Marbella, Moscow, New York, Oslo, Shanghai, St. Petersburg and Tokyo. As of December 2006, the group had total assets of SEK 1.4 billion and an operating profit of SEK 14.3 million.
Founded in 1991, Kyiv-based TAS-Kommerzbank is Ukraine’s 19th largest bank based on total loans and one of the fastest growing banks in the retail segment. At the end of 2006, its total assets were estimated at USD 1.1 billion with loans of USD 834 million and deposits of USD 675 million. Equity of TAS-Kommerzbank, including the equity contribution of USD 50 million, was USD 177 million, and it announced a profit at the end of 2006 of USD 10 million, reflecting the investment it had made in expanding its branch network. The bank currently operates a network of more than 180 branches throughout Ukraine, has 3,000 employees and provides services to more than 125,000 private customers and 16,000 corporate customers.
Ukraine’s banking sector is rapidly becoming one of the country’s most sophisticated industries as it battles to bring its operating standards up to a level comparable with major European banks. While remaining underdeveloped, it is evolving at a frenetic pace and has ample opportunities for growth. It is fast becoming the focal point for foreign investors following a change in Ukrainian banking law last year allowing full foreign ownership of Ukrainian banks. As of 2006, the total market capitalisation of Ukraine’s banking sector was only 5% of GDP, but this figure is expected to increase at a great rate over coming years. Current account, time and savings deposits and bank loans are expected to grow at the CAGR of 20.51%, 8.98% and 24.85% respectively for the next three years.
