BNP Paribas Group via its subsidiary Cetelem, the leading provider of consumer credit in Continental Europe, signed an agreement with Russian Standard Group, the major player on the Russian consumer market, represented by Roustam Tariko, founder of the Group. This agreement states that Cetelem will acquire a 50% stake in its holding financial arm which controls more than 90% of Russian Standard Bank (“RSB”). The International Finance Corporation (IFC), the private sector financing arm of the World Bank Group, holds 6,42% of RSB's shares. Cetelem's stake may be increased later depending on the further development of the Bank.
Roustam Tariko will remain Chairman of the Bank. The current management team of RSB, who made this bank a success and has a great knowledge of the Russian consumer credit market will continue to manage the bank.
The alliance with Cetelem will allow RSB to reinforce its position as the leading consumer finance institution of Russia, accelerate its development and further expand its portfolio of financial services through the support of Cetelem's operational, technical and financial resources. The BNP Paribas Group pursues its growth in financial services and Cetelem consolidates its position as the consumer credit market leader in Continental Europe.
This deal illustrates BNP Paribas' strategy, which relies to a large extent on its specialised subsidiaries to ensure international growth in consumer services. This will provide Cetelem with the leadership on the Russian market, which offers considerable growth potential.
With a population of 146 million, soaring consumption, and currently low household debt, Russia represents a very potential region for growth in consumer credit. This booming market grew by an average of 65% per year from 2001 to 2004 and the outlook for the current decade is extremely promising, bolstered by distribution organised in chains of sales outlets providing customers with easy access to credit offers.
BNP Paribas and RSB will review other potential alliances. Cardif, an insurance subsidiary of BNP Paribas, already partners Russian Standard Group in a bank insurance joint-venture, Russian Standard Insurance, in which Cardif holds a 26 % stake.
The transaction is subject to approval from the banking and anti-monopoly regulatory bodies. It is expected to be completed by the end of 2004.
Cetelem was advised by BNP Paribas Corporate Finance.
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BNP Paribas (www.bnpparibas.com
) is a leading financial services group in Europe, with strong positions in Asia and an active presence in the United States. It is the foremost bank in terms of net income and market capitalisation in the euro zone. BNP Paribas has one of the largest international banking networks, with a presence in over 85 countries and 89,400 employees, including 67,700 in Europe. Its key businesses are Retail Banking, Corporate and Investment Banking, Asset Management and Services.
), a wholly-owned subsidiary of BNP Paribas, is number 1 in consumer credit in the euro zone. At 31 December 2003, Cetelem managed over 29 billion euros in outstanding credit worldwide and pre-tax net income for the year amounted to 427 million euros, with a return on shareholders' equity before tax of over 30%. Cetelem is present in 20 countries, employs over 10,500 staff and has 30 million customers worldwide. Cetelem accounted for 7.6% of BNP Paribas Group's 2003 pre-tax net income and 30% of that of the Group's IRFS business line (International Retail banking and Financial Services).
Russian Standard Bank (www.rs.ru
) was founded in 1999. Over the five years of RSB's consumer lending program, it has extended loans to more than 3.2 million people, the overall volume of which has exceeded USD 1.4 billion. As on July 1, 2004 RSB issued more than 1.1 million credit cards for a total amount of USD 379 million. RSB employs 3500 staff.
RSB operates nationally and has implemented consumer lending program in more than 100 cities of Russia. As of July 1, 2004 RSB's total assets increased by 48% from the beginning of the year and amounted to USD 779 million, shareholders equity increased by 48% from the beginning of the year and totaled USD 183 million. The net profit 2003 amounted to USD 58 million after tax and USD 59 million for the first half of 2004. As on July 1, 2004, the return on equity (ROE) was 78%, the return of assets (ROA) 18%.