OAO Promsvyazbank, Russia’s 11th largest lender by assets, agreed to buy Samara-based Pervobank as a looming recession and high interest rates accelerate consolidation in the country’s finance sector.
As part of the deal, Pervobank shareholders will receive a 5 percent stake in Promsvyazbank and a seat on the board, according to an e-mailed statement from Promsvyazbank. Pervobank is controlled by billionaire Leonid Mikhelson, one of the owners of Russian gas producer OAO Novatek.
“We expect to achieve synergies, including increased business efficiency and scale, as well as network expansion,” Promsvyazbank chairman Artem Konstandian said in the statement Friday.
The Russian banking consolidation is intensifying as high interest rates, a slowing economy and sanctions over the conflict with Ukraine squeeze the nation’s lenders. The Russian billionaire shareholders of B&N Bank, said on June 30 they will acquire a controlling stake in MDM Bank from Sergei Popov for an undisclosed amount. Roman Avdeev, owner of Credit Bank of Moscow, is close to acquiring UralSib Financial Corp., Russia’s 25th largest by assets, Kommersant reported on May 15.
Pervobank Chief Executive Officer Andrei Goncharov told reporters in St. Petersburg that the bank’s further development is only possible with significant capital increase or a tie-up with a strong lender.
Upon completion of the merger, Konstandian said the bank will receive “strategic development goals” in the Volga region, where Pervobank is focused.