Commerzbank is in talks to sell Forum Bank

Commerzbank (CBK GR) is in talks with Smart Holding, one of Ukraine’s major business groups, to sell its 96% stake in Ukraine-based Forum Bank (FORM UK), according to business daily Ekonomicheskie Izvestia. According to the source, Commerzbank has been looking for an opportunity to divest Forum Bank for half a year.

Olena Zuikova: Forum Bank has been a headache for Commerzbank since its acquisition back in 2007 – the bank has remained loss-making for the last four years. While there is little wonder that the German bank is looking to exit, the news of actual interest in the asset is a slight surprise: the lender’s Cost/Income ratio stood at 116% last year while NPLs (loans overdue by more than 90 days) reached 65% of end-2011 gross loans (NPL coverage stood at 59%). If the deal is concluded, Forum minorities will have an option to sell their stakes to the new owner at market price. The current market price for Forum is UAH 1.0/share and implied 2012 P/B is 0.2X, which, we expect, would be much higher than Commerzbank’s divestment price