Austria's Erste Bank has bought a 55% stake in Ukraine's Bank Prestige for E27.7 million, in a bid to strengthen its position in the booming Ukrainian market.
Erste said the major shareholders plan to invest up to E117.8 million each over the next four years in order to support the banks’ business plan. The transaction is expected to be completed in October 2006.
Erste says that the Ukrainian banking sector has developed strongly in recent years, with total sector assets increasing by 19% in the last six months alone, driven by private household demand for credit. The group also claims that during the same period, the total credit volume lent by Ukrainian banks increased by about 47%.
This semi-greenfield operation combines local expertise with international experience and gives Erste Bank an early foothold in one of the most promising banking markets in central and eastern Europe said Andreas Treichl, CEO of Erste Bank.
To date, Erste Bank has successfully acquired 10 banks in central and eastern Europe in various privatization processes. With the entry into the Ukrainian market we aim to prove that we can not only restructure but also establish branch networks.
The bank, which will be jointly managed and supervised, will operate under the Erste Bank brand as a universal bank, focusing on both corporate and retail business.
The group also plans to develop a country-wide distribution network within the next two years and targets a market share of above 4% by total assets in the medium term.