Estonian banking group to establish a modern bank in Ukraine

TALLINN - Iute Group, an Estonian financial company operating in Southeastern European markets, is investing 15 million euros to establish a modern, fully digital bank in Ukraine.

Iute won a tender from the state-owned Deposit Guarantee Fund of Ukraine, which allows it to take over selected assets and deposits of RWS Bank, and has established a subsidiary in Ukraine to finalize the transaction.

The finalization of the transaction, including the transfer of approximately 13,000 retail client accounts and deposits, requires approval from the National Bank of Ukraine, which is expected later this month. RWS Bank is a bank with over 30 years of history, which was owned by Swedbank until 2013.

According to Iute Group CEO Tarmo Sild, the geographical expansion is part of Iute's strategy to build a digital bank for the daily financial needs of customers in Southeastern Europe. "The decision to enter Ukraine is based on our faith in Ukraine's future and its role in the European economic area. We see great growth potential in Ukraine, both from Iute's and Europe's perspective. The war has accelerated the development of one of Europe's most populous countries and has shaped Ukraine into one of the most digital financial markets in Europe, accompanied by a significant shift in people's mindset. War changes a lot. I believe that thanks to the bravery of the Ukrainian people, their country will become one of Europe's growth engines within five years," Sild said.

"The transaction brings Ukraine into our portfolio of markets and adds Iute Group's first fully digital bank, which will bear the Iute name from the very beginning. The Ukrainian IuteBank will be built from scratch. We are acquiring a transitional banking entity with a banking license and carefully selected assets and corresponding deposit liabilities from RWS Bank," Sild explained.

The bank's initial balance sheet total will be under 10 million euros.

The bank will operate under the name IuteBank and will be supervised by the National Bank of Ukraine. According to the banking license, Iute can offer all basic banking services, including accounts for retail and business clients, cards, deposits, loans, payments, currency exchange, and settlement and cash services.

Arthur Muravitsky, who has 22 years of experience in the Ukrainian financial sector, will become the head of IuteBank. According to Muravitsky, the initial prerequisites for the bank's daily operations are its capitalization, team assembly, and fulfillment of regulatory requirements. "The entire process has been supported from the beginning by both the Deposit Guarantee Fund and the National Bank of Ukraine. Their cooperation has been crucial for the project's progress," said Muravitsky.

According to Muravitsky, the first year of operation will focus on launching Iute's so-called super app and core products, as well as on client acquisition. In the next phase, the business will be gradually expanded by increasing volume and broadening the range of services.

Iute Group affirms that the expansion into Ukraine will follow the same disciplined risk management principles as in its other markets. "We handle the risks associated with Ukraine in the same way as in our other markets. We have set clear internal limits - our total investment in Ukraine will not exceed 15 million euros until specific revenue and profitability targets are met. By 2026, we forecast a potential loss for the bank of up to 3 million euros," said Sild.

Iute Group, its subsidiaries, and employees have supported Ukraine since the beginning of the war, including through financial donations. Iute Group transferred the first 100,000 euros to Ukraine three days after the full-scale war began in February 2022.

Iute Group is a banking group established in Estonia in 2008 that offers banking and financial services in Southeastern Europe. Iute serves clients in Albania, Bulgaria, Moldova, North Macedonia, and Ukraine. The banking group's subsidiaries provide digital financial solutions, including payment services, banking products, financing options, and insurance brokerage. Iute Group finances its operations through equity, deposits, and secured bonds listed on the regulated market of the Frankfurt Stock Exchange and the main list of Nasdaq Baltic. Since 2023, Iute has been the main sponsor of the Estonian National Symphony Orchestra and was named "Friend of Culture 2023".