Commerzbank sells Forum Bank to local businessmen

Commerzbank agreed to sell its stake (nearly 96%) in Forum Bank (FORM UK), its only Ukrainian subsidiary, to Smart Holding, according to a press release yesterday. The deal is still subject to the approval of regulators. Commerzbank said it does not expect a sustainable improvement in the Ukrainian economy and its banking business in the near future and therefore decided to sell Forum Bank. Commerzbank will continue to be represented in Ukraine by a representative office in Kyiv. The bank did not disclose the price of the deal, citing a confidentiality agreement, but said an extraordinary P&L charge related to the deal will total EUR 86 mln. In addition, Commerzbank will report a negative currency revaluation effect of approximately EUR 200 mln in its P&L but this item will not affect its equity.

Olena Zuikova: From the press release, we conclude the Forum Bank was sold to Smart Holding at a mostly symbolic price (Forum’s end-2011 equity stood at EUR 105 mln and Commerzbank reported a loss of EUR 86 mln on the sale of the bank). Ukrainian law on joint stock companies stipulates that a new controlling shareholder must purchase stakes from minority shareholders at the market price (UAH 0.89 or USD 0.11/share as of yesterday), if they request it. The share purchase offer must be submitted to all minority shareholders (via the bank) within 20 days of the date of acquisition. We recommend minority shareholders take the chance and sell their stakes to the bank’s new controlling owner as we do not believe Forum’s business will generate material value for shareholders any time soon.