UKRAINIAN BANKING INDUSTRY: Oleksandr Yaroslavsky poised to purchase Prominvestbank

Kharkiv business leader eyes acquisition of Ukrainian subsidiary of Russia’s VEB Bank

Business Ukraine magazine
Friday, 19 May 2017 17:18

The Supervisory Council of Russian bank Vnesheconombank (VEB) confirmed 18 May that they were considering an offer from Kharkiv businessman Oleksandr Yaroslavsky to acquire Prominvestbank (PIB), a subsidiary of VEB in Ukraine. The news comes following earlier statements from Mr. Yaroslavsky regarding his interest in investing in the Ukrainian banking sector and the possible purchase of one of three subsidiaries of Russian banks in Ukraine.

Speaking to the Ukrainian media on 18 May, Mr. Yaroslavskiy confirmed his offer to purchase PIB but did reveal details of the bid. “I have been interested in the acquisition of banking assets for a significant period of time. I previously entered into negotiations with Sberbank over the sale of its Ukrainian subsidiary. We signed a letter of intent and conducted due diligence, but the seller eventually withdrew from negotiations,” Mr. Yaroslavsky commented. He then turned his attention to alternative banking assets and identified PIB as an attractive opportunity, given the bank’s top five position on the Ukrainian market.

Mr. Yaroslavsky is not the only prominent business figure to express an interest in PIB. Russian developer of Ukrainian origin Pavel Phuks and independent Ukrainian MP Maxim Mitay, who is widely seen as an ally of Ukrainian President Petro Poroshenko, are also believed to be involved in talks over acquisition of PIB. Meanwhile, an earlier approach by Hungary’s OTP group was reportedly not on the agenda during the 18 May session of the VEB Supervisory Council.

Spokespersons for Mr. Yaroslavsky’s DCH group confirmed that he is now going to file an official application with the National Bank of Ukraine (NBU) to begin preparing the way for his bid to acquire PIB. According to VEB Chairman Sergei Gorkov, the bank is now waiting for a response from the NBU. Given the political sensitivity of the continued Russian participation in the Ukrainian banking system, financial market analysts believe the transparency of Mr. Yaroslavsky’s business group will work in favour of his bid.

DCH group has a long record of capital investment projects over the past two decades including UkrSibbank, Azot in Cherkassy, and Kyivstar. Mr. Yaroslavsky is perhaps best known for his investments in the Kharkiv region, which total more than USD one billion – including US 300 million to upgrade Kharkiv infrastructure ahead of the UEFA Euro 2012 football championship. The businessman’s most recent purchase was the iconic Kharkiv Tractor Factory, which returned to production in early 2017 following a 10-month pause.

Previous DCH group investments in the Ukrainian banking system have included the establishment of UkrSibbank and subsequent partnership with international financial giant BNP Paribas. DCH officials confirmed this week that the group is currently engaged in the process of purchasing the Kyiv-based INGO Ukraine insurance company, with documents already signed for an initial acquisition of a 25% stake in the company with a view to increasing control to 100%.

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