EBRD mulls acquisition stake in Raiffeisen's subsidiary in Belarus

EBRD mulls acquisition stake in Raiffeisen's subsidiary in Belarus
EBRD mulls acquisition stake in Raiffeisen's subsidiary in Belarus
By bne IntelliNews September 15, 2017

The European Bank for Reconstruction and Development (EBRD) is considering the possible acquisition of a stake in Priorbank, a Belarusian subsidiary of Raiffeisen Bank International (RBI) and the leading commercial bank in the country, EBRD president Suma Chakrabarti told Reuters on September 14.

"We are looking at [the state’s stake in] Priorbank and also some state-owned Belarussian banks," Chakrabarti said without elaborating. A 87.7% stake in Priorbank belongs to Raiffeisen Bank, while the government of Belarus owns a minority stake in the lender.

The statement followed an agreement secured in 2015 between the EBRD and the Belarusian government to privatise state-owned Belinvestbank after broadening its business activities and outreach. The EBRD will purchase a stake of 25% plus one share in the bank, after which controlling stakes will be sold to one or more strategic investors.

EBRD president also confirmed the lender's intention to participate in possible privatisation of Minsk-headquartered state-owned Bank Moscow-Minsk (BMM). "The Moscow-Minsk Bank is another one which we are interested to take forward - Moscow Minsk is already more commercially run anyway, this may be a quicker process," Chakrabarti told Reuters.

In June, the EBRD extended a €20mn financing programme to Bank Moscow-Minsk (BMM). The funds are extended in the context of the preparations of BMM for privatisation, which was agreed between the government of Belarus and the EBRD in 2016. They will complement joint efforts to strengthen BMM's corporate governance in line with best international practice and improve its commercial operations.

However, Minsk-based experts doubt that the Belarusian government is ready to privatise BMM due to de facto ban imposed on privatisation by the country's authoritarian president Alexander Lukashenko.

In 2015, the EBRD adopted a new four-year cooperative strategy for Belarus, creating an opportunity for enhanced engagement with the Belarusian authorities. In 2011 the lender revised its approach to Belarus due to the disputed 2010 presidential election and the continued violations of human rights. Instead it focussed on developing only the private sector and refused to give financial or technical support to the central authorities.