ICICI Bank buys Russian bank

Close on heels of the State Bank of India's (SBI) acquisition of a Mauritius bank, ICICI Bank today announced an acquisition in Russia.

India's largest private sector bank has acquired Investitsionno-Kreditny Bank (IKB) for an undisclosed amount. Through this acquisition ICICI Bank has acquired assets worth $ 4.4 million of which $ 2.5 million are loan assets. The bank has three branches "" one in Moscow and two in Kaluga region.

A senior ICICI Bank executive declined to quantify the acquisition cost but said "the bank paid a small consideration".

SBI recently acquired 51 per cent stake for a consideration of $8 million in Mauritius-based Indian Ocean International Bank. It is also planning to merge its Nigerian subsidiary with a local private bank Nal Bank

ICICI Bank acquisition makes it the first new generation private sector bank to enter the Russian market to cater to the growing retail and trade finance demand in the country. ICICI Bank is also opening its first branch in South Africa tomorrow, and is on an expansion spree in global markets.

"This acquisition will provide ICICI Bank a ready vehicle to support the bank's organic growth in Russia as acquisition of a branch licence is a time consuming process. As per local regulations, the bank would not to allowed to accept retail deposit for two years," said Kalpana Morparia, deputy managing director of ICICI Bank.

Sanjay Maheska, an executive with the international banking group, will head the Russian venture.

Initially, the bank will roll out wholesale banking products for Indian corporates through the three branches, she added.

Over a period of time the bank will evaluate the domestic consumer behaviour and launch retail operations, said Morparia.

Trade flow between India and Russia stands at around $ 4 billion annually.

Russian bank deposits has been growing around 40 per cent year on year for the last few years and consumer credit constitutes for around 5 per cent of total bank credit.

"Consumer demand and market dynamics in the Russian market is very similar to that of India. the bank's sees huge potential for retail and trade finance services in the Russia," she added.

ICICI Bank currently has subsidiaries in the United Kingdom and Canada, branches in Singapore and Bahrain and representative offices in the United States, China, United Arab Emirates, Bangladesh and South Africa.

Total inward remittances by non-resident Indians (NRIs) through the bank for financial year 2005 were over $ 3 billion.