Local lenders in the former Yugoslavia have swooped in as Sberbank of Russia unravels amid international sanctions, snapping up units of the Russian bank at knock-down prices.
Slovenia's biggest lender Nova Ljubljanska Banka dd, or NLB, for instance, paid just €5.11 million for Sberbank's business in the country, letting it boost total assets to €23.3 billion from €21.6 billion, based on S&P Global Market Intelligence data. Sberbank operations in Serbia, Croatia and Bosnia and Herzegovina have also been taken over by domestic banks.
The Sberbank units have gone to local banks partly due to the buyers' government ties and because international lenders are reluctant to rush into acquisitions, particularly in an area that is not a core focus for expansion. Clear paths, and local authorities' eagerness to find buyers before Sberbank units faltered, meant some lenders paid bargain prices for businesses boasting client bases with good credit histories and low risk provisions, according to InterCapital Securities analyst Domagoj Grčević.
The subsidiaries were acquired "dirt cheap" due to the urgency of the situation, Grčević said.
NLB underscored the bargain pricing by reporting a one-time gain of
"We were able to act quickly and be flexible as we were well prepared in terms of capital, liquidity position and understanding of the asset," an NLB spokesperson told Market Intelligence. Slovenia is the bank's largest shareholder.
Croatian lender Hrvatska postanska banka dd, or HPB, will also likely post a one-time gain from buying Sberbank assets, according to Grčević. HPB paid 71 million kuna for Sberbank's Croatian business, boosting its assets to the equivalent of €5.18 billion from €3.7 billion, based on 2021-end data. The deal moved HPB significantly closer to
AIK Banka a.d. took over Sberbank's business in Serbia, renaming it Naša AIK Banka. The deal boosted AIK Banka's total assets to €3.8 billion from €2.2 billion. The bank's market share reached 9%, moving it to 5th spot in the country from 9th, after leapfrogging lenders including units of Raiffeisen International and Erste Group Bank AG It remains behind units of Intesa Sanpaolo SpA, UniCredit SpA and OTP Bank Nyrt.The transaction price was not disclosed.
In Bosnia and Herzegovina, Sberbank's assets were divided up between ASA Banka d.d. Sarajevo and Nova Banka a.d. Banja Luka. ASA Banka paid 15 million Bosnian convertible marka for its share, according to local media. The deal more than doubled the bank's assets to €1.35 billion, and its market ranking surged to fourth from 14th. Nova Banka's assets rose to €1.9 billion, cementing its third spot.
AIK Banka, ASA Banka, HPB and Nova Banka did not respond to Market Intelligence's requests for comments.
The Sberbank deals add to a run of acquisitions in the region, notably by NLB, AIK Banka and Hungary-based OTP Bank. Uncertainty caused by the Russian-Ukraine conflict risks cooling this spree, Lukas Freund, an associate at S&P Global Ratings, told Market Intelligence. Still, opportunities remain.
"The market in those smaller countries is quite fragmented, which makes it easy for a larger bank like NLB or OTP to make use of their economies of scale and to deploy their standardized digital business model, potentially disrupting the market," Freund said.
NLB expects further consolidation in all of its markets in the medium term, its spokesperson said. Ongoing upheavals could even hasten the process.
"The increased uncertainty surrounding the business environment and arising from the current market conditions may create new M&A opportunities," the spokesperson said.
Europe exit
Sberbank said in early March that it was exiting most of its European markets after local subsidiaries experienced an abnormal outflow of deposits amid Russia's invasion of Ukraine. Regulators ordered the closure of the bank's holding company in the region, Austria-based Sberbank Europe AG. The Czech and Hungarian central banks also canceled the licenses of Sberbank's local units.
International lenders showed little interest in the sale of Sberbank's units in the former Yugoslavia partly because most are not looking to grow in the region, with the notable exception of OTP, according to Danijel Delač, a board member at Croatia-based InterCapital Securities. Indeed, Sberbank itself last year agreed to sell the majority of its network in central and southeast Europe to AIK Banka. That deal ultimately fell through.
The need for swift action as Sberbank stumbled also favored domestic banks, particularly as lenders under state control or with close government ties likely felt a need to step in, said Jovan Sikimic, senior equity research analyst at Raiffeisen Research. This urgency similarly weighed against any overseas banks that might have considered a deal.
"Regulators in southeast Europe were pushing for quick decisions," Gunter Deuber, head of Raiffeisen Research, told Market Intelligence in an email. That is something "local banks were able to cater to, while large international banking groups would possibly have carried out longer compliance checks."
As of June 27, US$1 was equivalent to 7.1 Croatian kuna and 1.86 Bosnian convertible marka.