Vladimir Yevtushenkov will include Home Credit in Sistema
The structures of AFK Sistema Vladimir Yevtushenkov are negotiating the purchase of Home Credit Bank, two sources in the financial market told RBC.
Another source in the banking sector and a source in Sistema’s partner company said they had heard of such plans by AFK.
Sistema owns MTS Bank, but it is inferior in size to Home Credit, so another structure of the group will be the buyer, one of RBC’s sources said. The possibility of transferring the asset to the ownership of the mobile operator MTS (controlled by Sistema) is being considered, another source says. According to one of the interlocutors of RBC, the negotiations are close to completion. So far, the architecture of the upcoming deal suggests that the Home Credit brand will be preserved, but an asset swap between Home Credit and MTS Bank is not ruled out in the future, he says. Now the course of negotiations is influenced by the situation in Kazakhstan, where a state of emergency has been introduced after mass protests and subsequent riots, adds another RBC source. Home Credit has a large subsidiary bank in this country.
“AFK Sistema is an investment company, we regularly work on various options, this is also the essence of our work,” a representative of the group told RBC. “No comment, we do not comment on market rumors,” said a Home Credit spokesman.
The fact that Home Credit Bank was put up for sale became known in early October – as Frank Media wrote, the Hungarian OTP Group, which already owns OTP Bank in Russia, planned to buy it. Another RBC source in the financial market noted that there were three applicants for Home Credit – they had been conducting due diligence of the bank since the fourth quarter of 2021.
Home Credit is controlled by the Czech PPF Group. According to Frank Media, the decision to sell the bank was made shortly after the death of the founder of the group, Peter Kellner, who died in a helicopter crash in Alaska in March 2021. PPF did not disclose who would inherit Kellner’s stake. The businessman is survived by his wife and four children. As of June last year, his wife Renata Kellnerova was appointed manager of the inheritance.
In October 2020, the bank’s shareholders announced a change in the head of the Russian Home Credit. They became the former head of BCS Bank Dmitry Peshnev-Podolsky. Peshnev-Podolsky reported in May that a week before his death, Kellner had approved a three-year Home Credit development strategy. “I presented him what to bet on, what amount of capital in Russia needs to be supported in order to maintain growth, what to focus on in order to consolidate positions, and what to give up. In the coming years, we had everything discussed with him regarding Russia, ”said the top manager.
RBC sent inquiries to MTS, MTS Bank, PPF Group and OTP Bank.
Main indicators of “Home Credit”
According to the results of January-September 2021, the net profit of Home Credit amounted to 11.2 billion rubles. (40% of the bank’s financial result was provided by its subsidiary in Kazakhstan) against 7.3 billion rubles. for the same period in 2020, follows from IFRS reporting. The volume of the bank’s assets is 344.5 billion rubles, the capital is 91.3 billion rubles. (Traditionally, investors are guided by the amount of one capital when buying banks). According to one of the interlocutors of RBC, the amount of the transaction to purchase the bank may exceed €1 billion.
“Typically, a bank’s valuation is close to its capital, sometimes a little lower or a little higher, depending on the level of return on capital (ROE) and the growth rate of assets and earnings. Home Credit has a good return on capital, above the average on the market, and therefore a small premium to the size of its capital is not ruled out, subject to a high-quality loan portfolio of bank borrowers, ”said Mikhail Ganelin, senior banking sector analyst at Aton, to RBC.
“The bank’s strong profitability provides a good cushion to cover loan provisioning costs, which could be volatile due to the bank’s high exposure to the cyclical Russian consumer lending market,” Fitch wrote in September. They noted that the impact of the pandemic on the quality of loans in Home Credit was “restrained.” The bank is not systemically important in Russia and, according to Banki.ru, ranks 31st in terms of assets in the Russian banking system.
Sistema’s interests in the banking sector
AFK “Sistema” has already considered the purchase of another large Russian credit institution – Tinkoff Bank. “Yes, I was really interested in it. But I didn’t do it, because <…> it’s difficult to combine two different cultures – ours and Tinkoff, and we could lose along the way a sufficient number of those preferences that each of these companies has, ”said in an interview RBC is the main owner of Sistema Vladimir Yevtushenkov. He noted that this prospect also scared Oleg Tinkov: “We are not doing the first approach [к покупке Тинькофф Банка]. At some stage, both he and we decided to abstain from this, although human relations [c Тиньковым] absolutely normal.” Tinkov himself then, however, said that he had not discussed the sale of his bank with Yevtushenkov.
The assets of the main financial asset of AFK Sistema – MTS Bank – as of September 30 last year amounted to 258.5 billion rubles, follows from its financial statements under IFRS. Profit in January-September last year decreased to 5.1 billion rubles. from 5.4 billion rubles. a year earlier. The bank’s capital is 50.7 billion rubles. As of December, it ranked 34th in terms of assets among Russian banks, follows from the Banki.ru ranking.
Yevtushenkov said that AFK Sistema is discussing the idea of holding an initial public offering (IPO) of MTS Bank in 2022. He clarified that the bank’s valuation for entering the stock exchange should exceed $1 billion.
