Vilniaus Bankas buys controlling stake in Ukrainian financial institution

  • 2004-10-06
  • From wire reports
VILNIUS - Vilniaus Bankas has acquired 90 percent of Ukrainia's Agio Bank as part of its strategic plans to expand into the Eastern market. The bank, Lithuania's largest in terms of assets, reportedly paid 76.3 million litas (22.1 million euros) for the stake.

Raimondas Kvedaras, Vilniaus Bankas deputy chairman, told a news conference on Oct. 4 that total investment in the expansion project would reach 23.1 million euros as the bank, which is owned by Sweden's SEB, positions itself to become a leader in the underdeveloped Eastern market.

"We are willing to strengthen our position on promising new markets where our customers do, or intend to do, business," Kvedaras said.

"With the purchase of a majority holding in Agio Bank, SEB will be the first Scandinavian bank to enter Ukraine's market," he added.

According to the bank officials, over 6,000 corporate customers of the SEB group - including 700 Vilniaus Bankas customers - were engaged in business activities in Ukraine.

Vilniaus Bankas chose Agio Bank from about 20 potential takeover targets since it was pleased by the bank's professional staff and the transparency of its activities, Kvedaras noted.

The full package of SEB services, including leasing, investment banking, and life insurance, will be available on Ukraine's market in about one-year, Vilniaus Bankas' deputy chairman said.

Share purchase contracts, which were signed in September, will come into effect after relevant regulatory authorities in Lithuania and Ukraine approve the transaction. On Oct. 1 Vilniaus Bankas applied to the Bank of Lithuania for transaction permission.

Kvedaras said the deal should be completed by the end of the year. The European Bank for Reconstruction and Development will remain on Agio Bank's shareholder list. It is expected that the EBRD's stake will decrease after new shares are issued, he added.

Still, EBRD officials saluted the acquisition.

"The search for possibilities on Ukraine's market for SEB is of particular importance for the country's banking sector and a positive signal for foreign investors. We are willing to support the activities of Vilniaus Bankas in Ukraine and are currently considering the best ways to do that," said EBRD President Jean Lemierre.

Agio Bank, a retail bank established in 1991, ranks 53rd in Ukraine by assets. As of late June, the bank's assets amounted to almost 58 million euros, while the loan portfolio stood at 26.4 million euros, and equity totaled 13.8 million euros.

The bank, which operates eight branches and four customer service offices, offers services to some 22,000 customers, of which 16,000 or some 70 percent are small and mid-scale companies.