The EBRD has committed to acquiring a 7.5 percent of newly-issued ordinary and voting shares of Credit Bank of Moscow (CBM) for 2.9 billion roubles (EUR 74 million). The funding obtained through this share issue will be exclusively used to strengthen the capital of one of Russia’s fastest-growing banks.
The acquisition of these shares is being made in conjunction and on parallel terms with the International Financial Corporation (IFC). The transaction will, when completed, bring the combined stake of the two international financial institutions in CBM to 15 percent.
CBM has committed to improve corporate governance and transparency. The capital increase to which the EBRD and IFC are subscribing will thus provide important institutional support for this client’s plans to launch an Initial Public Offering (IPO) during the course of the next five years, market conditions permitting.
If carried out, such an IPO would demonstrate to other privately-owned Russian banks the logic of going public in order to raise capital. At the moment, only three privately-owned banks are listed and traded in Russia.
The investment builds on the injection of around USD 485 million in capital made by CBM’s beneficial owner, Roman Avdeev, in 2009-2011 which enabled the bank to expand rapidly despite of the financial and economic crisis which had earlier hit Russia.
As a result of this, CBM ranked 21st among Russian banks as measured by asset size as of the end of the first quarter of 2012, having leapt from 55th position at the end of 2008.
Established in 1992, CBM is a universal bank with its base in the Russian capital and the adjoining Moscow region. It serves 420,000 individuals and 22,000 legal entities with many of its clients operating nationwide although headquartered in Moscow.
The EBRD investment will give the EBRD the right to nominate a candidate for election to CBM’s board of directors.
Prior to this transaction, the EBRD was a shareholder in 13 Russian banks and its total Russian bank equity portfolio amounted to EUR 471 million.
Last year, the EBRD became a shareholder in three Russian banks, investing nearly EUR 120 million. Together with increases in the capital of Russian banks in which the EBRD was already a shareholder, its equity investements in the Russian banking sector totalled EUR 150 million in 2011.