Raiffeisen International is No.1 in the CIS

Following the acquisition of JSC Impexbank, Raiffeisen International Bank-Holding AG is now not only the largest foreign banking group in Russia, but also the largest foreign banking group in the Commonwealth of Independent States (CIS).In February 2006, Raiffeisen International had announced the acquisition of 100 per cent of Impexbank. The deal was closed on 28 April and now finalised with a press conference in Moscow.

The purchase price for Impexbank amounts to at most USD 550 million plus a possible price adjustment arising from the revaluation of the future headquarters and will be paid in two tranches. The first tranche of USD 500 million was paid on 28 April 2006. The second tranche of up to USD 50 million will be due after submission of the certified 2006 financial statements.

Among leading retail banks in Russia

Impexbank is one of the leading retail banks in Russia. As of 31 December 2005, the bank showed total assets amounting to € 1.6 billion (an increase of 55.8 per cent compared with year-end 2004) and a profit before tax of € 26.1 million (exceeding the 2004 result by 54.4 per cent). The number of employees amounted to 5,116. Based on assets, it ranks 21st on the Russian banking market. Impexbank is a universal bank with particular strength in retail and SME business. Customers are served through its nationwide distribution network of approximately 190 branches and offices as well as 350 consumer finance outlets.

"This acquisition makes us the leading western bank in Russia and puts us in the top league of retail banks in the country. Retail is the most promising banking market segment. We save at least four years of branch expansion. In fast growing markets, time is of even greater value. We will use this time to attract new private and SME customers. Until 2008, we will increase our branch presence by 80 to a total of 300 covering the entire country", said Herbert Stepic, CEO of Raiffeisen International. "We are especially content about the fact that the well-respected management team of Impexbank stays on board and will continue to develop the bank with us."

"We were looking for a new owner of the bank in order to secure the continuation of our growth. Raiffeisen International has proven in the past that they know well to build on the strengths of an organisation, therefore they are the ideal new owner", said Dmitry Eropkin, CEO and President of Impexbank.

Apart from Russia, Raiffeisen International has also a leading presence in the high growth banking markets of Belarus and Ukraine. Bank Aval and Raiffeisenbank Ukraine together form the largest banking group in Ukraine, while Priorbank is the largest foreign-owned bank in Belarus as number three on the market. This makes Raiffeisen the largest western banking group in the CIS region with total assets of more than € 10 billion. The second largest international banking group shows assets of approximately € 5 billion. In 2005, the CIS segment already contributed 27 per cent to Raiffeisen International's profit before tax of € 568.6 million, and the trend goes up: In the first quarter of 2006, this share – which amounted to 19 per cent in 2002 – was already at 30 per cent.

Russia offers huge potential for Raiffeisen International

The Russian banking market is by far the largest in the growth region of Central and Eastern Europe (CEE). At the same time it is one of the fastest growing markets in the region, with total banking assets expanding by 56 per cent to € 287 billion in 2005. Comparing total assets with GDP shows the market's tremendous growth potential: While total assets account for about 80 per cent of GDP in the new EU-Member states of Central Europe, this ratio is only at 45 per cent in Russia. Especially retail banking is set to offer huge growth potential for the long-term future as more than 80 per cent of the Russian population do not own a bank account yet according to current research.

Raiffeisen International has been present in Russia since 1997 through its subsidiary ZAO Raiffeisenbank Austria. Raiffeisenbank showed total assets of € 3.9 billion as of year-end 2005 (plus 87 per cent), making it Number 10 in the country with a total of 1,674 employees. It currently serves its customers via 32 business outlets in Moscow, St. Petersburg, Ekaterinburg, Samara, Novosibirsk, Chelyabinsk and Nizhniy Novgorod. Due to this structure, there are almost no overlaps with Impexbank branches.

With the acquisition of Impexbank, Raiffeisen is well-positioned at the forefront of retail banking development in Russia. Together, Impexbank and Raiffeisenbank will be No. 4 in the Russian retail loan market. "With the countrywide branch-presence of Impexbank, we reach around 70 per cent of the Russian population, which is a potential of approximately 100 million people. No other foreign owned bank has this potential in Russia", Stepic said.

Legal and operational merger scheduled for 2007

The integration of Impexbank into Raiffeisen International's network has already started: Project teams are working on integrating risk management and treasury functions, introducing Raiffeisen International Group standards. Quick wins are expected in the areas of central procurement, centralisation of head and back-office functions and the combination of cash transport, call centres and common clearing accounts with correspondent banks. Furthermore, a new common IT-architecture will be implemented and a new organisational structure worked out. The future branding of the bank will be decided in the course of 2006. "We will fully merge the two banks on legal and operational terms in 2007", Stepic said.

A new Supervisory Board for Impexbank has already been elected with senior representatives from Raiffeisen International: Herbert Stepic (Chairman), Jeffrey Millikan (Deputy Chairman), Martin Grüll, Heinz Wiedner and Aris Bogdaneris. Millikan is Regional Director for the CIS, all others are board members. Boris Ivanishvili complements the board.

Customers benefit from integration

Raiffeisen will quickly start to offer its products through the extensive branch network of Impexbank. As early as July 2006, Raiffeisen expects to start selling its pension funds products through Impexbank branches and consumer finance outlets in Moscow. Starting in August, it is planned to sell Raiffeisen Investment Funds nationwide via Impexbank's network.

Customers already benefit from the integration by gaining free access to the combined ATM network of Impexbank (400 ATMs) and Raiffeisenbank (360) which started on 12 May.

Raiffeisen International operates one of the leading banking networks in CEE with subsidiary banks and leasing companies in 16 markets. More than 10 million customers are attended through approximately 2,700 business outlets. In seven markets, the respective Network Bank ranks among the three largest local banks. Representative offices in Lithuania and Moldova complement the Group's presence in the region. Raiffeisen International is a fully consolidated subsidiary of Raiffeisen Zentralbank Österreich AG (RZB), which owns 70 per cent of the common stock. The remaining 30 per cent is free float, the shares are traded on the Vienna Stock Exchange. RZB is a leading corporate and investment bank in Austria and the central institution of the Austrian Raiffeisen Banking Group, the country's largest banking group.