UniCredit Seeks the ‘Right Buyer’ for Kazakhstan Unit ATF Bank

UniCredit SpA, the biggest western lender in eastern Europe, would sell its Kazakh lender, ATF Bank, if there is an offer by the “right buyer” and its reputation is not put at risk, a company executive said.

“We mentioned always that everything depends on the price,” the head of UniCredit’s eastern European division, Gianni Franco Papa, told journalists in Vienna late yesterday. A sale of the unit, owned by UniCredit’s Bank Austria arm, also depends on who would buy it. “We have also a reputation to defend,” Papa said. The decision would be made by the Milan-based company’s board of directors, he said.

UniCredit Chief Executive Officer Federico Ghizzoni is selling assets in a five-year plan to cut costs and boost profit. Ghizzoni told Bloomberg News in a March 2011 interview that the company would consider selling Almaty-based ATF Bank.

UniCredit is in talks to sell a stake in ATF to a Kazakh investor, a person with knowledge of the matter said last month. It received a $570 million bid by investors, including the mayor of Almaty, Austrian newspaper Die Presse reported last week without saying where it got the information. Papa declined to elaborate.

UniCredit’s Bank Austria, which owns 99.7 percent of the fifth-largest Kazakh lender, bought ATF for $2.1 billion in 2007. It has written down the unit’s value as the nation’s banking industry suffered a surge in bad loans.

Papa said ATF bank was now in a better shape. “If I look at the situation three or four years ago and what we achieved in the last couple of years, overall we’re very happy with the performance, compared to before,” he said.

Fragmented Regulation

While growth in the 18 countries in the former communist part of Europe where UniCredit is active will continue to be higher than in western Europe, the region’s fragmented regulation is one of the biggest risks, Papa said.

Central and eastern Europe “is one of the main engines of the development of the group,” Papa said. In the first nine months of this year, eastern Europe including Poland generated 1.8 billion euros ($2.4 billion) in net operating profit, 59 percent of UniCredit’s total.

Business in the region is complicated by national restrictions on capital movement and inflexible accounting standards in some of the countries, Papa said.

“We have a regulator in every country, a regulator in Austria and then we have the ultimate regulator that is Bank of Italy,” he said. National regulators’ “ringfencing, or rather protecting the home turf, is creating some problems because you can’t move capital across the region,” he said. “In some cases you can’t pay dividends.”

UniCredit would welcome the European Union’s planned single bank supervision under the European Central Bank’s umbrella being applied to the bloc’s eastern members as well as having more uniform rules, Papa said.

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