Erste Group Withdraws from Ukraine

Published: December 20, 2012; 15:14 · (Vindobona)

Austrian Erste Group enters into an agreement to sell Erste Bank Ukraine.

Erste Group Withdraws from Ukraine / Picture: © Erste Group / Christian Wind

Erste Group has today entered into an agreement with the owners of FIDOBANK, a group of companies ultimately controlled by Oleksandr Adarich, about the sale of its Ukrainian subsidiary, Erste Bank Ukraine, for a cash consideration of USD 83m (about € 63m*). This decision is consistent with Erste Group’s focus on customer business in the Eastern part of the European Union. Erste Group expects the closing of this transaction during the course of 2013.

As a result of this transaction, Erste Group will recognise a charge (fair value valuation) of about € 71m after tax in the Q4 12 income statement (pre-tax: about € 94m). Upon closing of the transaction the negative currency translation effect (EUR/UAH) related to capital and goodwill in the amount of € 80.4m as at 30 September 2012, which is already recognised in equity will be recycled through the income statement. Thus, this technical booking will not affect the capital position of Erste Group. Erste Bank Ukraine employs 1,536 staff and had a balance sheet total of € 758m as at 30 September 2012.

Furthermore, Erste Group has to downsize radically in Romania. Erste Group´s Romanian subsidiary BCR (Banca Comerciala Romania) will lose about 1,600 employees. According to BCR´s CEO Tomas Spurny, 18% of the whole workforce is affected. Spurny explained that it would be important now to save the jobs of the remaining 7,500 employees. In total, 60 branches will be closed.