Ukrsotsbank plans share capital increase

Ukrsotsbank (USCB UK) plans to increase its share capital, subject to approval at an AGM scheduled for April 20. Additional details on the prospective capital increase will be provided after March 19.

Olena Zuikova: Ukrsotsbank is sufficiently capitalized, with an end-2011 capital adequacy ratio of 13.3%, well above the NBU-required minimum of 10%. We expect the bank’s capitalization to remain high through 2012 as its equity should grow broadly in line with assets. Therefore, we do not think Ukrsotsbank is shoring up its capital solely to improve its capital position. At the same time, we do not rule out that a capital increase could be related to the prospective merger with UniCredit Bank Ukraine. Last year, UniCredit Group announced it planned to merge its two Ukrainian subsidiaries, but the timing remains unclear. Alternatively, UniCredit Group might invite a new strategic investor (possibly an IFI) to buy new shares. According to Ukrainian legislation, the bank is obliged to buy shares back at market price from shareholders who vote against share capital increases. We think this provision should support Ukrsotsbank’s share price until the AGM.