Euromoney

12 July 2008

Best equity house: Dragon Capital

Best bank: Ukrsibbank

Best debt house: UBS

The Ukrainian economy has been coping well under the pressures of domestic political uncertainty and global financial turmoil. In 2007, GDP grew by 7.3%, while retail sales increased by 28.3%. And Ukrsibbank has continued along its own growth curve. Majority owned by BNP Paribas since April 2006, the bank is the third largest in Ukraine in terms of assets, shareholders equity and loan portfolio. Although PrivatBank and Raiffeisen Bank Aval are bigger, they cannot match Ukrsibbank's dynamism.

Ukrsibbank is the country's top mortgage lender, with 18.8% of the market, according to the Ukrainian National Mortgage Association. The bank has a 7.3% share of the country's loan market, with retail loans growing by 81 % in 2007, and corporate loans by 53%. In deposits, the numbers are similar, with growth on the retail side reaching 75% last year, and growth in corporate deposits topping 80%. The bank plans to increase its 4.1 % share of the domestic deposits market to 6.2% by 2010, with its share of the loan market looking to reach 9.6%. Ukrsibbank is also expanding in other areas so as to compete with such rivals as PrivatBank and Raiffeisen. In February 2008, the placement of additional shares totaling $100 million was registered, and in March Urksibbank's shareholders resolved to increase the bank's share capital by $184 million, to $793 million.

The domination of Ukraine's debt market by UBS continues unabated. The Swiss bank closed five deals for a total of $600 million between April 2007 and March 2008, accounting for a market share of 12.4%. Its nearest competitors were Deutsche Bank and Credit Suisse, which each managed four deals for $425 million, an 8.79% share apiece. Notable deals from UBS include the second Eurobond from Nadra Bank. The $175 million deal was almost double the size of its first offering in 2005 (another UBS effort), and priced almost 100 basis points tighter in spread terms. Despite volatile market conditions, the order book ran to more than $230 million, and allowed pricing inside the initial guidance area and an increase in the deal value to $175 million from the originally planned $150 million.

UBS was also chosen to lead manage bond issues from the Ukrainian ministry of finance, the third year in a row that the bank has been given that task. The two deals, one of $500 million in June last year and another of $700 million in November, were both comfortably oversubscribed.

In a nascent equity market that is now providing a real attraction for international investors, Dragon Capital has impressively maintained its leadership. In 2006, it was responsible for 32% of stock-trading on the country's PFTS exchange, the volumes on which had grown 50% over the 2005 figure. In 2007, the year-on-year increase was even higher, at 67%, and Dragon maintained its number one position, with 29% of the market. Despite the small drop in market share, Dragon still holds twice as much as its nearest competitor.

Dragon also accounted for one-third of the $1.8 billion in new equity capital that was raised in Ukraine through IPOs and private placements in 2007. Dragon arranged 10 of the 20 deals to come to market in 2007. Highlights include the $208 million flotation of its own affiliate, Dragon-Ukrainian Properties and Development, the largest real estate IPO ever to come out of Ukraine.