Russian banks are shaping up to make acquisitions in eastern and central Europe, taking advantage of the continued weakness of some western institutions amid the financial crisis.
 

Andrei Kostin, chief executive of VTB, Russia’s second-biggest bank, said in a video interview with the Financial Times that his strategy was modelled on the acquisitive growth pursued by the likes of Santander and Citigroup. “We’ll be developing organically but, when we see a good opportunity, we’ll be buying,” he said. “Our focus is Russia first, CIS countries second.”

Although Mr Kostin did not believe expanding into western Europe was a good idea, Russia’s number one, Sberbank, is known to have considered deals in Austria, largely attracted by the Austrians’ ownership of eastern European subsidiaries. Analysts believe that Austria’s banks are among the least well-capitalised in Europe, with some at risk of failing important stress tests next month.

Many of eastern Europe’s banks are owned by western European parent banks that suffered in the financial crisis.

Sberbank, which last month confirmed an interest in buying Austria’s Volksbank International, recently brought Alessandro Profumo, the former head of Italy’s UniCredit, on to its board. UniCredit is a leading player in eastern Europe.

Mr Profumo is carefully studying opportunities for Sberbank across eastern Europe, with a particular focus on assets in the Baltics and Kazakhstan, the people said.

Sberbank is keen to use Austria as a springboard. In addition to Volksbank, it has since studied the possibility of making a capital injection into Raiffeisen Bank International, according to one person with knowledge of its plans, although the Austrian bank said it could “rule out” such a transaction.

Richard Hainsworth, head of RusRating, an independent bank rating agency in Russia, warned that any acquisition by Sberbank could drag out. “The Russian government would need to approve the decision, and that will be a bureaucratic process and take a long time,” he said. “[But] it could happen one day.”

Sberbank and VTB, both majority owned by the Russian government, recognise that Russian history would make it politically difficult to expand in certain parts of eastern Europe, particularly Poland.

Several leading banks in Poland, for example, are owned by victims of the crisis – Belgium’s KBC, ING of the Netherlands and Portugal’s BCP Millennium. Under orders from regulators, Allied Irish last year sold its Polish business to Santander.

Eastern Europe’s banks are expected to bounce back strongly this year, with analysts predicting loan growth of up to 15 per cent and profitability on a par with pre-crisis levels.

Financial Times