MDM Bank, Russia’s second-largest non-state lender, is considering acquiring banks in the region as its loan growth lags the industry, Chairman Oleg Vyugin said.
“The merger trend, which started in the crisis, is continuing,” Vyugin said in an interview at the Troika Dialog investment conference today in Moscow. “We are looking for specific regions to expand our presence and the best option is to buy small banks which own 20 to 30 branches.”
Vyugin said the Moscow-based bank would consider lenders priced at “no more” than one times book value. Russian banks were bought before the financial crisis in 2008 at three to four times book value. Barclays Plc bought Expobank, Russia’s third-biggest bank, at about four times book value in March that year.
MDM’s loan book growth has been “flat” this year, compared with the industrywide trend of 15 percent to 20 percent, Vyugin said.
“Shareholders don’t want to take a big risk with the capital,” Vyugin said. “They want to keep the business more modest to avoid additional risks.” Shareholders are now considering whether to change their policy to enable the bank to “grow cautiously,” he said.
Vyugin, a former central banker and deputy finance minister, said that were Prime Minister Vladimir Putin to face a runoff in his bid to return to the presidency it would make the election “more legitimate” and “a signal that the alternative point of view in society is being heard.”
Putin is running for a third term as Russia’s president in elections scheduled for March 4, after having to step down in 2008 because of term limits. Opposition groups are preparing for to protest in Moscow tomorrow against the results of a Dec. 4 parliamentary poll, where Putin’s United Russia party won a reduced majority amid allegations of vote rigging. The government has said the vote was fair.
-- Editors: Jon Menon, Steve Bailey