Banca Intesa, which has started exclusive takeover negotiations with the owners of Ukraine's fourth-largest bank, Ukrsotsbank, at the beginning of the month, revealed yesterday that the deal would value the Ukrainian Bank at approximately USD 1.31bn. This equates to which equates to 7x historic book value (total equity (9m05A) = USD 186.9m ) and 38.6x prospective earnings (net income (2005F) = USD 33.9m). Additionally, Intesa reported that its total investment would amount to USD 1.161bn. This comes significantly above market speculation for a multiple of some 4.5 - 5.2x book value, similar to that believed to have been paid by BNP Paribas for a 51% stake in UkrSibbank last year.
Whilst OTP Bank failed to win in its bid for Ukrsotsbank, we believe that retrospectively, shareholders should be pleased with management's conservative approach and proven reluctance to overpay for assets. We reiterate our Buy rating with a fair value estimate of HUF 9,040.8 per share.