Home Credit business model introduced at IBA after acquisition

By bne IntelliNews October 17, 2008

Clare Nuttall in Almaty -

International Bank of Almaty is re-branding as Home Credit after Jiri Smejc, a large shareholder in the Netherlands-based investment firm PPF Group that owns Home Credit, bought 90.01% of its shares. Home Credit acquired the remaining 9.99%.

PPF, which is owned by Czech billionaire Petr Kellner, said that Smejc will introduce the Home Credit business model at IBA, and the existing Home Credit Kazakhstan operations could be rolled into the bank. However, the bank's new ownership structure precludes it being integrated into Home Credit's Russian or Central European businesses.

In a press release announcing the acquisition, Smejc said that: "The strong consumer finance franchise of Home Credit, having been successfully implemented in Kazakhstan will, in my opinion, fit best into strategy supporting the growth of IBA."

A spokesman for PPF, Milan Tománek, told bne that a team from Home Credit Kazakhstan, on Jiri Smejc's invitation, had already drafted the action plan to turn around the IBA into a retail, lending-centric institution. "The next collaboration between the two institutions may possibly include a transfer of the entire Home Credit Kazakhstan business and employees into IBA bank," he said.

Tománek added that PPF had been looking for potential acquisitions in Kazakhstan. "To continue Home Credit's market leadership in Kazakhstan, to become profitable on a sustainable, long-run basis requires Home Credit to achieve the same regulatory, provisioning and tax treatment that the local competitors have already enjoyed," he said.

"Given the market situation, the local regulator prefers foreign investors to step into existing banks over to issuing the new licenses for financial operations. Therefore, we have been searching market opportunities to find a licensed entity in the local banking sector in order to either acquire it or to set up the partnership with its shareholders."

IBA's founding investor was Turkish holding company Okan Holding. The Almaty-based bank received its licence in 1995. It has since opened offices in Astana and Petropavlovsk. As of end-August, it was ranked 27th out of 35 Kazakh banks in terms of assets. Its total assets were $36.4m, just 0.03% of the Kazakh banking system's total.

Renaissance Capital notes that IBA's capital amounted to KZT1.5bn (€9.2m) as of end-August, and points out that the bank would have needed to increase its capital to a minimum of KZT5bn by July 2009 to comply with the Kazakhstan's new regulatory requirements. Other small banks struggling to increase their capital by the deadline may also become acquisition targets, or face closure.

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