EnterInvest Vice President comments on Alfa growth plans in Belarus on the Financial Times


 

The influence of Russia in Belarus’ banking sector is easily spotted. All of Russia’s major banks have subsidiaries in the country and provide them with support.

Russian finance could be set to increase further: Alfa Bank, controlled by billionaire Mikhail Fridman (pictured), is discussing the possible acquisition of another Belarusian lender. But the target, although rumoured, is still unconfirmed.

Alfa Bank’s Belarusian subsidiary, Alfa Bank (Belarus), has been in operation since 2008 after the Alfa Group consortium completed the acquisition of the Belarusian Bank of International Trade and Investments. Currently, Alfa Bank (Belarus) ranks 10th in assets among the 32 banks in Belarus.

But now Alfa his looking for more, according to Piotr Aven, Alfa Bank’s chairman in comments to reporters in October. He did not elaborate on which bank was under consideration, but said: “If there is a deal, we will announce it by the end of the year”.

The comments reinforced Aven’s ealier comments in September, when during a meeting with Belarus Prime Minister Mikhail Myasnikovich, he said that Alfa Bank wanted to expand in Belarus “quickly and see the opportunities for that… we are thinking about acquiring another bank in Belarus.”

Despite the fact that Alfa Bank is keeping silent on the name of the bank that might be bought, experts on the Belarusian banking sector believe strongly that the target is state-owned Belinvestbank, the fourth-largest bank by assets.

According to people familiar with the matter, Myasnikovich is not keen on a possible acquisition of Belinvestbank. However, that may not the end of the story. In Belarus such strategic decisions can only be made by one person – President Alexander Lukashenko.

Fridman visited Minsk after Aven’s failed negotiations and had a meeting with Lukashenko, according to a beyondbrics source. The results of the personal meeting between Fridman and Lukashenko are not known.

Oleg Andreyev, vice-president of the investment banking department at Minsk-based investment company EnterInvest, told beyondbrics that the Belarusian authorities might be wary of selling Belinvestbank to the Russian banking group due to concerns over diversification. “At the moment the share of Russian banks in the total assets of the Belarusian banking system is very close to 25 per cent,” he said.

“On the other hand, Russian subsidiaries are the largest providers of loans nominated in foreign currency to Belarusian companies, as their parent banks have better international rankings than the Belarusian state-owned banks,” Andreyev added.

A merger with Belinvestbank would allow Alfa Bank (Belarus) to get access to a large number of customers in the country, as well as a leasing company and several developing companies.

Andreyev adds: “However, besides obvious advantages, there are also many problems. Belinvestbank has to finance the very risky operations of Belarus’ state-owned enterprises, therefore its credit portfolio is quite toxic.”