How TAS Group bought Idea Bank

Poland’s Getin Holding and Ukraine’s TAS Group have signed an agreement to acquire Idea Bank Ukraine. The purchase will cost the new owner $34 million and will become the first merger and acquisition deal in the banking sector after Russia launched its full-scale invasion of Ukraine in February 2022.

Ukraine’s central bank, the National Bank of Ukraine (NBU), forced Idea Bank’s previous owner, Getin Holding, to sell the bank before the end of October as owner Leszek Czarnecki became the subject of a criminal investigation in Poland.

The NBU recognized the impeccable company reputation of both the Polish company itself and its owner Charnecki on March 27, 2023, Interfax-Ukraine reported. Getin Holding’s advisors included Ukrainian investment company FinPoint and Ukrainian law firm Sayenko Charenko.

The buyer of 100% of the shares is Alkemi Limited (Cyprus), part of the TAS Group, owned by Serhiy Tigipko.

The deal has been signed, but this is not the end of the story. It must also be approved by the NBU and the Antimonopoly Committee of Ukraine. The agreement is governed by English law and the requirements of the Warsaw Stock Exchange, TAS Group press release said.

“If regulatory approval is obtained, the transaction could be completed in the first quarter of 2025,” TAS Group’s press service told Kyiv Post.

Before this year’s deal closed, however, Idea Bank was already a lucrative property.

Strong business model

Idea Bank was one of the first commercial banks in Ukraine and received a banking license in 1996 records of the NBU. In the 2000s, Poland’s Getin Holding bought it, making it part of the group.

According to NBU statistics, Idea Bank ranked 26th in terms of assets for nine months in 2024 (Hr.11.7 billion, $282 million).

Idea Bank’s net profit ranks 19th in the list and includes only Hr. 473,000 ($11,400). The bank is known for its consumer loans (small loans that individuals can borrow before they get their next paycheck) and is not alone in this niche. Other players earn much more, for example A-bank and Monobank. A-bank earned more than Hr. 1 billion ($24.1 million) in net profit for the same nine months this year, while Universal Bank, which runs Ukraine’s popular digital bank for Gen Z Monobank, earned almost Hr.4 billion ($96.5 million).

Despite Idea Bank’s modest results, Ukrainian investors were already hunting for the bank before the COVID-19 pandemic. A Dragon Capital Group company, owned by Czech entrepreneur Tomas Fiala, nearly bought the bank for $58 million in 2019, but canceled the deal when the pandemic broke out.

PUMB bank, a unit of SKM Holding, owned by Ukraine’s richest man Rinat Akhmetov, signed a deal to buy the bank for around $50 billion in late 2021, but the deal was not completed due to Russia’s invasion of Ukraine. Forbes Ukraine reported.

What makes Idea Bank so special?

A banking industry source close to the 2024 deal who asked to remain anonymous told Kyiv Post that the bank works with riskier clients and does so with confidence, although specific details cannot be made public due to their sensitivity.

“Just to scratch the surface: the bank is successful in its niche and competes successfully in the riskier segment of private lending,” the source said.

The bank’s share of loans amounts to about 70% of its portfolio – the highest level compared to other players in the Ukrainian banking sector, with an average of 25%. The biggest competitor is Bank Lviv, with a portfolio consisting of 64% loans.

“This is the most bankable bank in Ukraine,” financial analyst Yevhen Dubogryz wrote in his post Facebookwhich explains the phenomenon.

The number of non-performing loans is 44% – in 2022 this was still 60%.

This “seems like a lot” according to Dubogryz. But the main indicator of profitability, the cost-income ratio, reaches 34% – one of the best results in the sector.

“The bank can generate net $10 to $12 million per year and can pay it back in 3 to 3.5 years,” the financial analyst added.

So let’s look at the buyer.

Who are TAS Group and who is Serhiy Tigipko?

The Idea Bank deal was a sellout. Poland launched an investigation in 2008 against the owner of Getin Holding, Leszek Czarnecki, Poland’s richest man. He became the subject of charges by law enforcement officials for alleged fraud involving 130 million zloty (£32.2 million) of customer money at Idea Bank Poland, Polish media reported.

Czarnecki lost both Idea Bank and Poland’s tenth largest bank, Getin Noble Bank (GNB), as they were both placed in the state bank’s guarantee fund due to lack of capital.

Czarnecki probably left Poland in the trunk of his car and is now hiding abroad, Polish media wrote. This may explain why the NBU has recognized the business reputation of both the Polish holding itself and its main owner Czarnecki as poor, Interfax reported.

In May, the regulator set a deadline to sell quickly until the end of October 2024. This complicates the transaction.

Three finalists proposed higher prizes than the other five, the source said. The amount of 34 million dollars turned out to be a considerable price for Ukraine in wartime.

“The sale price of the bank is equal to approximately 1x of the capital as of the end of 2023 and approximately 0.75-0.8 of the bank’s capital as of the planned closing date of the transaction. Our publicly traded competitors are typically valued from 0.3 capital (Raiffeisenbank International) to 1+ capital (OTP),” wrote FinPoint founder Serhii Budkin.

Initially, the Ukrainian TAS Group emerged as the winner. TAS Group is owned by Ukrainian Serhiy Tigipko, a successful entrepreneur and politician.

Its owner, Serhii Tigipko, is the founder of Privatbank, Ukraine’s largest bank, but he later sold it to Dnipro-based oligarch Ihor Kolomoisky. He founded the TAS Group, which includes companies in the financial sector: B2B bank TASkombank, retail Gen Z digital bank Monobank, leading car insurance company TAS.

TAS Group operates a factory that produces freight wagons, Dniprovagonmash. It also became a sandbox for digital banks, from which the neobanks Sportbank and Izibank were founded. Izibank is still active, but Tigipko stopped working with Sportbank and was closed in 2024.

Tigipko was involved in politics as a lawmaker during the time of former Ukrainian President Viktor Yanukovych, who fled the country after the Maidan Revolution in 2014. In 2024, Tihipko is now focusing on business and his strategy is ‘invest in Ukraine and sell abroad. ”

The company’s portfolio includes an agricultural holding company with 80,000 hectares of land and 11 factories in various industries. These include the production of wagons for European railways together with Austrian heavy industry giant Voestalpine.

Idea Bank is a potential vehicle for monetizing retail lending. The Polish investigation may even have helped finalize such a long-awaited deal for the Ukrainian market.

Idea Bank Ukraine was profitable without any help from the parent company, which is the bank’s strength.

“Ukrainian Idea Bank was not affected by the problems surrounding its shareholder,” ICU financial analyst Mykhailo Demkiv told Kyiv Post.

“The bank has a transparent business model and is profitable,” he added.