One of Ukraine’s few home-grown investment banks is considering making a bid for a nationalized lender should the government put the company up for sale after seizing it from a group of businessmen led by billionaire Mikhail Fridman.
(Bloomberg) — One of Ukraine’s few home-grown investment banks is considering making a bid for a nationalized lender should the government put the company up for sale after seizing it from a group of businessmen led by billionaire Mikhail Fridman.
Ukrainian authorities last month took over Sense Bank, the nation’s 11th largest by assets, after sanctions were imposed on its Russian stakeholders. Now Kyiv-based Dragon Capital is exploring an acquisition, according to owner and Chief Executive Officer Tomas Fiala.
“We are potentially interested,” he said in an interview in his office in the Ukrainian capital on Thursday. “We will be looking probably to team up with some international co-investors to buy this bank because it’s quite large.”
With Sense Bank, the state’s share in banking assets has risen to about 56% as the government now owns five large lenders, including Privatbank, which was taken from Ukrainian tycoons Igor Kolomoisky and Gennady Bogolyubov in 2016. The size of the state’s presence has raised concerns with the International Monetary Fund, which has urged Kyiv to sell government-controlled lenders.
“For the government, it would make sense to sell it as soon as possible, given firstly that it’s the fifth bank owned by the government and secondly the track record of managing state-owned banks is not very good,” Fiala said. “The risk is high that it’ll be abused, there will be political appointments and political projects that it will be used for.”
The Finance Ministry said in an emailed response to questions that it was “interested in reducing the state’s share in the banking sector, and so we will be preparing banks including this one for sale.”
ABH Holdings SA, the previous majority stakeholder of Sense Bank controlled by Fridman and partner Petr Aven, in June threatened litigation if the government nationalized the lender. While that would not amount to “direct risk,” such a move “could cause some inconvenience,” Fiala said.
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Dragon owns a wide range of assets in different industries, including Unex Bank, whose roughly $71 million in total assets are dwarfed by Sense Bank’s $2.6 billion. Fiala’s aim is to boost his share in retail lending via the acquisition, as he expects to generate strong income after the war against Russia ends or subsides.
Czech citizen Fiala already has a team ready to manage Sense Bank. Countryman and Unex CEO Ivan Svitek held top positions at Alfa-Bank Ukraine — the former name of Sense Bank — between 2017 and 2019, including the period when the lender merged with another large domestic bank.
The country’s lenders have been enjoying large profits since last year, as Russia’s invasion and capital controls imposed by the National Bank of Ukraine to shield the hryvnia caused a liquidity surplus, as well as high yields on government bonds and central bank deposit certificates that lenders invest in, boosting their income.
“So it’s a gold mine, which we will finish by the end of this year because, you know, inflation is falling faster than expected,” Fiala said.
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