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Friday 21.09.2018 | Name days: Matīss, Modris, Mariss

M2M Private Bank head hopes outbidding competitors at Citadele’s auction

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU, Roberts Idelsons

The Russian M2M Private Bank's head Roberts Idelsons

The holding company VMHY Group hopes that it can offer a better price for AS Citadele Bank than the other stakeholders, at the time when the government decides to initiate the bank’s privatization process and invites investors to submit their offers.

The Russian commercial bank M2M Private Bank head Roberts Idelsons indicates in an interview to the business portal that, since he himself has worked at the bank and knows what businesses can be developed there, he is hoping to offer a more advantageous price than the other competitors.

Already a year ago,VMHY Group submitted an offer to the Privatisation Agency on acquiring Parex Bank’s private equity management business, as well as bank’s loans issued in CIS countries. However, since currently Citadele is much smaller than at the time when VMHY Group expressed interest in purchasing the undivided bank, the Group is ready to purchase the entire bank.

One year ago, the undivided Parex Bank’s balance was uncertain with a large number of problem assets; therefore, at that time VMHY Group offered to buy only part of the bank. Now that the bad loans have been separated, the business is smaller and more transparent, so to attain Private Banking business the whole bank can be purchased, Idelsons says.

Idelsons confirms that VMHY Group is likely to purchase the entire Citadele, retaining part of the business to itself and further selling the rest. Yet it is too early to discuss when and how this might happen, as the transaction has not been started yet.

He also notes that as of yet there are no concrete talks on Citadele‘s acquisition, so there is no point in discussing it.

We are waiting until the government decides to privatize the bank. After that, we expect to be invited to submit our offer. Currently, there is no necessity for further negotiations, says Idelsons, adding that the Group is certainly  not the only one interested in buying Citadele.

Asked whether he knows how much and who are VMHY Group’s competitors in the fight for Citadele, Idelsons notes he has heard about the competitors only trough the media.

In connection with Citadele’s acquisition, DnB Nord and Nordea have been repeatedly mentioned in the press. According to Idelsons the wish of both banks to increase their market share is reasonable; however,  already now they are able to do it in an organic way. Therefore, as the time passes, the Western banks’s interest will decline.

Unofficial information suggests that other Russian banks are showing interest in Citadele and, according to Idelsons, in general the Russian banks are interested in Latvian banks and establishing new banks.

As reported, Idelsons estimates that Citadele’s sale price is up to 150 million lats.

Given all the problems that occurred in the Latvian banking sector and the uncertainty about the economic and market growth prospects, the expert considers the price at which it is possible to sell any bank in Latvia is at the extent of its capital or one and a half of capital. It depends on the bank’s profitability, the markets where it operates and its clients.

Idelsons believes that Citadele’s advantage is that all the bad loans were taken out and there are no assets that would reduce the transaction sum, so one of the key factors is the bank’s future profitability.

At the moment Citadele’s capital is around 103 million lats. Idelsons assesses that if Citadele is sold at a price worth 1.3 –1.4 capitals, it will be a very good deal.

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  1. Indra says:

    Would one lat be a nice price to pay for a bank that looses millions lats every month paid by latvians tax payers .

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