Mergers and Acquisitions in Russia

Affected, apparently, and reduced interest of foreign investors in the Russian market M & A. «Until 2008, the quality of assets of Russian banks do not doubt. Now, foreigners rarely come on the market, even taking into account the fact that the domestic banking sector is underdeveloped and is not monopolized, as in other countries such as Canada or the Czech Republic» — Maxim says Solntsev, chairman of SDM-Bank.

The current lack of activity on the M & A market experts attributed to several factors. The financial difficulties of some banks, mostly second and third levels, encourage the owners to look for opportunities to sell or the alliance. On the other hand, assets in the banking sector, according to Yaroslav Zabello still sold fairly cheap when compared to pre-crisis period: the current bank is on average one and a half to two shareholders' equity, depending on the brand’s branch network and state of assets, whereas before the crisis, the multipliers averaged over three equity. Now the process of forming new banking groups (such as a bank «Orient Express» and bought Kamabank City Mortgage Bank, had previously been attached Etalonbank and the bank «Movement», as in the first half of 2010 there was a formation of the banking group of Trudy Bank, Bank Mint House, and the bank Donbank «Slavic», etc.). Not so long ago completed the merger of the bank «Russia» and Gazenergoprombank. In the long term bank «the County» will be part of «Discovery» is in full swing merger Rosbank and Bank Societe Generale Vostok.

A number of mergers and acquisitions in the banking sector stands out from the statistics. I t is a kind of «interception» client bases, personnel and premises of banks. S.

uch tactics, according to Director of Strategy Savings Dmitry Tarasov, in some ways is less risky than traditional transaction M & A, whereby the buyer receives in addition and all the «skeletons in the closet.» Interception «in the banking sector are now very often especially in the regions, experts say.» However, this is unlikely to become a basic tool: the benefit of purchasing an already existing bank said the brand, the presence of the loan portfolio, etc." - believes Jaroslav Zabello. W ith the resumption of economic growth and rise in price of banking assets is expected to sanitize the sale of banks that will be expressed to reduce the state’s share of the Russian banking system. will gradually be renewed and the expansion of the global world banks on the domestic market, experts predict. The new round of development was due primarily to the development of financial markets, the BRIC countries — China, India, Brazil and South Korea and Japan.

I t is worth noting that the lack of dynamics on M & A market is observed not only in Russia. H owever, in the last couple of months on the world financial market shows signs of a thaw. I n late August it became known that two major and, most importantly, financially neproblemnyh U.S. Bank — First Niagara Financial Group and NewAlliance Bancshares — announced a merger. A ccording to preliminary estimates, the transaction value is $ 1.5 billion In addition to the funds will be used in the calculation and action.

T his will be the first major transaction M & A in the banking sector since 2008. B ut overall market recovery will happen later than expected. The key factors as to mergers and acquisitions in the banking sector during the second half of the year will consolidate the banks, buying up near-bankrupt companies their more successful competitors, and the establishment of banking groups, writes Kommersant.

Conclusion.

The key factors as to mergers and acquisitions in in Russia in 2007:

Greater competition drove consolidation in numerous industries.

Domestic firms sought vertical as well as horizontal integration.

Foreign strategic buyers sought entry into the fast growing Russian market.

A second wave of foreign strategic buyers is arriving, smaller in scale than the first wave of multinationals.

Foreign financial buyers sought solid yields and upside exposure.

Smaller Russian companies are seeking new capital for expansion to meet drastic market growth.

Large Russian companies are flush with cash and buying abroad.

Many Russian companies of all sizes are seeking the most modern technology and best practices.

Russian M&A is becoming more sophisticated and valuedriven.

Strong economic fundamentals will support strong volumes in the mid-market space.

Literature.

http://www.kuno-cpa.co.jp/tcf/russia/ma-e.html.

http://www.ruscham.com/en/rossinfo/db/16.html.

http://rusmergers.com/en/mna/.

http://www.pwc.ru/en/mergers-acquisitions/russia-2007.jhtml.