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European banks jostle in relatively unbanked Ukraine

The announcement, as The Banker went to press, that Sweden’s SEB Group had signed an agreement to acquire 97.25% of Factorial Bank in Ukraine was the latest in a line of such acquisitions by European banks from outside the country.
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Factorial Bank is a 53-branch operation based in eastern Ukraine around the city of Kharkiv. Following completion of the deal, which is subject to regulatory approval, the bank will be merged with and rebranded as SEB’s existing subsidiary, SEB Bank Ukraine (ex-Bank Agio).

In August, Commerzbank agreed to take a majority stake in Bank Forum, and UniCredit had already stepped in to acquire Ukrsotsbank when Intesa withdrew. These latter deals still await finalisation.

The attraction of the banking market for foreign players is the same now for the Ukraine as it was originally for the other countries of central and eastern Europe. It has a largely under-banked population with an increasing disposable income in an economy that continues to grow (government figures predict GDP growth in the region of 7.2% and inflation of 6.8% for 2008). There is also no apparent regulatory restriction to foreign participation.

The downside is the reliance of the economy on a limited set of industrial sectors (metals, chemicals, agriculture, transport) that are vulnerable to external shocks, especially from Russia which is both customer (metals, chemicals) and supplier (gas).TOP BANKS IN UKRAINE: 31 DECEMBER 2006 ($M)

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