Raiffeisenbank Buys 50% Stake in Belarussian Priorbank

The arrival of Austrian Raiffeisenbank in Belarus will significantly strengthen the country's banking system, according to Belarussian First Deputy Prime Minister Sergei Sidorsky. The deputy prime minister was commenting on Raiffeisen Zentralbank Osterreich's purchase of 50% of Belarussian Priorbank.

The deal was approved by a general meeting of Priorbank's shareholders on January 17. The Austrian bank acquired a 50% stake in Priorbank for USD 31.4 million. As a result of the deal, which involved an additional share issue, Priorbank's authorised capital stock has doubled from approximately USD 6.7 million to USD 13.4 million.

According to Sidorsky, Raiffeisenbank's entry into the Belarussian market testifies to the positive trends in the country's investment climate. The deputy prime minister said that the Austrian bank intends to participate in both Belarussian projects and in its own.

Raiffeisenbank's chief executive Jeffrey Millikan confirmed that 'this is the beginning of a wave of new investment in Belarus.' However, he refused to say how much money the bank planned to invest, or which companies that bank was planning partnerships with. 'We are mainly interested in exports, oil and gas, maybe chemicals and minerals, and also a few heavy machine-building factories with good contracts,' said Millikan.

Priorbank was founded in 1988 as the Minsk Innovational Bank. Since 1997 its main shareholder has been the European Bank for Reconstruction and Development (EBRD), which owns 27% of its shares. According to experts, the increase in Priorbank's authorised capital stock means that the EBRD's stake will halve, as will the stakes of other shareholders. Priorbank is the largest private bank in Belarus - on June 30, 2002 its assets were worth EUR 202 million. The bank has 70 branches throughout Belarus. It has about 400,000 clients, including 376,000 individual clients.

The Raiffeisen group is Austria's second largest banking group. It has 13 banking institutions, 2 representative offices, and over 600 branches in 13 Central and Eastern European countries.

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