The Russian economy continues to expand, driven on by energy and metal exports, completing seven years of continuous growth since the financial crisis in the late-1990s. Real GDP grew by 6.4% in 2005 on the back of the 6.8% for 2004 we reported last year. The estimate for growth in GDP in 2006 is between 5% and 6%. Economic growth has stimulated consumer demand and business confidence as well as providing a better climate for foreign investment. The banking sector has continued to expand on the back of this and, despite continued systemic weaknesses, is likely to continue to do so. For our Top 50 Russian banks, aggregate pre-tax profits grew 112.8% to $8910m, aggregate assets increased 40.9% to $257bn and aggregate Tier 1 capital rose 41.1% to $30.3bn.
The list continues to be dominated by the directly or indirectly government-owned banks, such as Sberbank, Vneshtorgbank and Gazprombank. Vneshtorgbank’s figures show the benefits of the consolidation under it of the former Central Bank of Russia overseas subsidiaries. Moving up to fourth place this year is Ural Siberian Bank, the Nikoil-owned entity, following the consolidation of all Nikoil’s banking assets under the one bank last October. Bank Zenit acquired the smaller Devon-Kredit Bank in 2005, although it more than doubled its number of branches through the acquisition.
Foreign influence
Our Top 50 contains seven majority foreign-owned banks, the well-established Raiffeisenbank, International Moscow Bank, Citibank, Deutsche, ABN AMRO and ING Bank (Eurasia) – being joined by Home Credit and Finance Bank (formerly Innovation Bank Technopolis), owned by the parent company of Ceska pojistovna, the big Czech insurer. UniCredit, which through HypoVereinsbank had the majority voting rights in International Moscow Bank at the end of 2005, has consolidated its holding by purchasing the shareholding of Nordea Bank Finland recently, leaving BCEN-Eurobank and the EBRD as very much the minority shareholders.
Foreign banks have also been carrying out direct acquisitions that have so far not been the norm. In 2005, Société Générale acquired Delta Credit Bank, a mortgage bank that became part of SG Vostok Bank, and Promek-Bank (Samara), a consumer finance bank, through its Russian-based subsidiary Rusfinance, which then merged with Promek to form RusFinance Bank. Also in 2005, Italy’s Intesa acquired a majority holding in KMB-Bank and GE Capital acquired DeltaBank.
The trend has increased in 2006 as Investsberbank was acquired by OTP of Hungary and Raiffeisenbank acquired Impexbank (at 36 in the present Top 50) and which will disappear as a separate entity. Société Générale, through its subsidiary RusFinance Bank, acquired SKT Bank and then bought a 10% stake in Rosbank (at 11 in the Top 50), which later in the year it increased to 20% minus one share.
