Tinkoff Bank and Rosbank will be part of one group

Tinkoff (MOEX: TCSG)-bank and Rosbank, control over which after the outbreak of hostilities in Ukraine was gained by the structures of Vladimir Potanin, are officially united into a group. In essence, TKS Holding is acquiring Rosbank. There is no talk of an actual merger of banks yet. Mr. Potanin calls the deal “integration,” and Tinkoff says they are taking the bank “under an umbrella.” But experts assume complete consolidation in the future, noting the negative nature of the transaction for investors and the risks of deterioration in the efficiency of Tinkoff Bank even at the first stage.

The Board of Directors of MKPAO TCS Holding (TCS Group Holding after redomiciliation to Russky Island) plans to initiate an extraordinary meeting of shareholders to decide on the placement of additional shares in order to increase capital, including for the acquisition of Rosbank by contributing it as payment for the shares being placed, they reported in the group on Thursday, March 14th. If the transaction is approved, due diligence of the asset will be carried out and the necessary regulatory approvals will be obtained.

“The proposal for the integration of Tinkoff and Rosbank seems promising,” Interros quotes Vladimir Potanin as saying. “The result could be the creation of a universal banking group.”

“Now we are talking about the intention to integrate assets under the umbrella of the holding. Shareholders will decide. It’s too early to talk about other fundamental decisions,” Alexey Malinovsky, head of the board of directors of Tinkoff, told Kommersant. Rosbank will continue to operate under its license, it was confirmed there. Interros and Tinkoff Bank did not provide additional comments.

Senior analyst at Alfa Bank Evgeny Kipnis notes that, based on the latest share price of TCS Group Holding (February 15) on the Moscow Exchange and Rosbank’s capital assessment (RUB 188 billion), to integrate the holding, it needs to issue 61 million new shares (31% of capital ).

Managing Director of Expert RA Yuri Belikov believes that in its current form, integration is “simply the structuring of ownership and management of assets, taking into account the change of ownership that has occurred, which is more in the legal sphere than in the field of banking.” According to B1 partner Gennady Shinin, credit institutions “are very different, in particular Tinkoff Bank developed as a digital bank without branches, so the current design of the deal with the preservation of two licenses is justified.” If Tinkoff is predominantly a retail bank (loans to individuals make up 97% of the portfolio), then Rosbank has a more balanced structure: almost 55% of the portfolio is retail, the rest is corporate loans. Kommersant’s interlocutors admit that the banks will merge in the future.

If the merger took place now, the merged credit institution would take 8th place in terms of assets in the Russian Federation (RUB 4.3 trillion).

According to Interfax, as of December 31, 2023, Tinkoff Bank occupied 11th place in terms of assets (2.2 trillion rubles), Rosbank – 12th place (2.2 trillion rubles). In general, comparable banks are rarely included in the same group. There are examples of holdings on the market in which several banks are present, however, as a rule, they differ significantly in assets, for example, Sberbank (1st place) and Drive Click Bank (31st place).

The banking group is not a legal entity, so its creation will not require approvals from the Central Bank and the Federal Antimonopoly Service, notes Igor Dubov, partner at the law firm Iontsev, Lyakhovsky and Partners. In practice, the choice of the group’s head bank remains with the owner, and this decision is not necessarily made based on the size of assets, adds Roman Koenigsberg, head of the internal audit department at FBK. But even in its current form, the merger will mean strengthening regulatory oversight, Mr. Dubov emphasizes, the financial position and compliance with standards will be assessed, including at the group level.

Shares of MKPAO TKS Holding will begin trading on Russian stock exchanges on March 18. Rosbank shares at Moscow Exchange trading increased by 22%, but the trading volume was insignificant – 265 million rubles. (which is due to the small number of securities in free circulation, less than 1%).

For minority shareholders of TKS Holding, the deal can be considered “moderately negative,” notes the portfolio manager of a large Russian management company. Firstly, according to him, Rosbank can be valued above its fundamental value (to obtain greater economic interest in the group), which currently amounts to 0.6–0.8 capital. Secondly, Kommersant’s interlocutor explains, the process of integrating Rosbank’s less profitable business may negatively affect the performance indicators of Tinkoff Bank. And finally, the additional issue will dilute the shares of minority shareholders.

Olga Sherunkova, Maxim Builov, Vitaly Gaidaev