Barclays banks on Russian credit card market
British giant Barclays is entering Russia's retail banking sector by buying Expobank, which has about 250,000 retail customers in Moscow and St Petersburg.
Expobank's owner Petropavlovsk Finance is selling the firm to Barclays for $US 745 million.
Barclays says it hopes the deal will be a platform for it to become one of the leading retail and commercial banks in Russia.
Barclays already offers investment banking services in Russia, through its subsidiary Barclays Capital, but buying Expobank is its first venture into the country's retail-banking sector.
Kevin Dougherty, an analyst at Pharos Financial Group in Moscow explains why Expobank, and why now.
“Expobank is particularly strong in the credit card business, which is set to grow dramatically in Russia. So, it is a smart acquisition for Barclays Retail. Now it is going to continue to put huge growth numbers in Russia. Now is a pretty good time to buy because, quite frankly, the global financial markets are a bit shaky and banks might be willing to sell now at prices that you are not going to be able to buy them at three or four months down the road.”
The deal made the business pages of newspapers in Russia and abroad on Tuesday.
Vedomosti Daily looks at the high price Barclays was prepared to pay for Expobank.
The British bank is paying four times Expobank's book value. The newspaper says that's surprising during a global credit squeeze. Analysts say the average price over the past year has been no more than three times book value
The Financial Times also looks at what the deal means for Barclays. It's the bank's first major deal since its failed bid for Dutch rival ABN Amro last year.
Barclays is keen to expand rapidly in Russia and tells the FT it believes buying a Russian bank is a better strategy than opening its own branches in the country.