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05.05.2006

BA-CA plans vigorous expansion of its Russia business

  • The Russian banking market is growing by around 30 per cent per year
  • The 8th largest Russian bank, IMB, will become part of the BA-CA network in CEE
  • IMB is planning to double its branch network to around 50 branches this year

Bank Austria Creditanstalt (BA-CA) is planning a vigorous expansion of its business in Russia. International Moscow Bank (IMB), currently still a subsidiary of HypoVereinsbank, is to become part of the BA-CA network at the end of 2006. Within UniCredit Group, BA-CA will manage banking subsidiaries in Central and Eastern Europe. The existing branch network will be doubled already by the end of this year, from the present 24 to around 50 branches, and should continue to grow at such a dynamic pace in the future. In this manner, the Group plans to quickly increase its market share in Russia. Long-term goal: 10 per cent.

Erich Hampel, CEO of BA-CA: "With IMB, we are gaining one of the most important banks in what is arguably the most important market in Central and Eastern Europe. It is our clear aim to grow vigorously in Russia. The time for launching this expansion could not be better."

With about 144 million inhabitants, Russia is one of the largest markets in Central and Eastern Europe. With real economic growth in the years from 2001 to 2005 of just under 35%, the country is one of the most dynamic markets worldwide. By way of comparison, the EU 15 achieved 6.9% growth during the same period. According to BA-CA economists, for the coming years, the Russian GDP is anticipated to grow by 5.6% per year. 

Russian banking business is booming
"The Russian banking market is booming", says Erich Hampel. With growth rates of around 30% per year, the banking market in Russia is displaying the strongest growth in Central and Eastern Europe. Business in the retail sector is growing even more quickly: BA-CA estimates that, for example, private lending business will treble during the next three years.

A comparison of the account-holding rate is also significant: while 94% of the population hold a bank account in Austria, in Russia the figure is just 18%.

Russia is not only the largest banking market. According to an analysis by the Boston Consulting Group (BCG) and BA-CA economists, it also offers the largest revenue pool in the growth market of Central and Eastern Europe, with 26% of total operating revenues in the region. This compares with 17% for Poland and 9% for Hungary.

IMB: Vigorous expansion planned
IMB is currently growing more rapidly than the Russian banking market as a whole: while aggregate total assets of banks grew by 33% in 2005, IMB grew by 53%. "We intend to continue to grow at least at the same rate as the market in the coming years", says Mr Hampel. "It is our long-term goal to achieve a 10% market share in Russia, too," he adds. Initially BA-CA intends to pursue organic growth in Russia; however, it does not rule out future acquisitions. "We will closely monitor developments," says Mr Hampel.

With total assets of USD 5.5 billion, IMB is now the eighth-largest bank in Russia. As the first international bank in Russia, it was established with registration number 1 in October 1989. Creditanstalt was one of its founding members. In 2001, the merger took place with BA-CA Russia, the then subsidiary of the BA-CA Group. In May 2005, HypoVereinsbank took over the majority shareholding in IMB. It now holds 53% of the bank. As part of the business combination between UniCredit and HypoVereinsbank, BA-CA was allocated the full group responsibility for the markets in Central and Eastern Europe (with the exception of Poland). At the end of 2006 / beginning of 2007, the subsidiary banks of UniCredit and HypoVereinsbank in the CEE area (including IMB) are to be transferred to BA-CA.

IMB is a bank specialising in corporate banking. Retail banking business is currently being built up as a second pillar. The bank sees further potential with cross border clients that the UniCredit Group is already serving in other countries within the Group. IMB employs around 1,500 staff, operates 24 branches and serves around 140,000 customers (as of 2005 year end). In 2005, it generated after-tax profits of USD 106 million. With an ROE of 28%, it is among the most profitable banks in Russia.

UniCredit Group operates the largest international banking network in Central and Eastern Europe. More than 60,000 employees in more than 2,900 branches serve around 17 million customers. Within this network, BA-CA is responsible for 24 countries with more than 300 million inhabitants.

Inquiries: Bank Austria Creditanstalt Press Office
Peter N. Thier, tel. 05 05 05 52371
e-mail: peter.thier@ba-ca.com