After crunch, Kazakhstan on radar of CEE banks

VIENNA (Reuters) - Central European banks are eyeing oil-rich Kazakhstan for further expansion after the country's banking sector went through a severe refinancing crisis, bankers at the Reuters Central European Investment Summit said.

Raiffeisen International (RIBH.VI) and Hungary's OTP OTPB.BU are looking for acquisition targets in the central Asian republic, while UniCredit (CRDI.MI) is eyeing organic growth after its recent acquisition of ATF Bank ATFB.KZ.

"In Kazakhstan, we felt we missed the boat," OTP Chief Financial Officer Laszlo Urban said at the Summit, referring to the high prices that had been paid for Kazakh banks before the recent liquidity crunch.

"But now, their valuation is coming down, if not necessarily to the bottom," Urban said, adding that at the same time oil revenues in Kazakhstan were still high and unlikely to come down, creating an opportunity in the country.

Heavy foreign borrowing has made some Kazakh banks especially vulnerable to the global credit crunch and prompted ratings agencies to place their ratings under review.

Kazakhstan's banking regulator now plans to tighten limits on foreign borrowing introduced earlier this year, according to a draft of the regulation seen by Reuters, limiting growth opportunities for banks not backed by a strong foreign owner.

For UniCredit, which bought ATF Bank in a $2.275 billion deal in June, hamstrung competition makes growing organically the best option, Willi Hemetsberger, UniCredit's Head of Global Markets, said at the Summit.

Asked if the falling share prices of Kazakh banks provided acquisition opportunities, Hemetsberger said: "Yes, but we feel it's better to go aggressively with organic growth as we have access to funds... This is an easier and cleaner growth path."

The CFO of Raiffeisen International's owner RZB, Patrick Butler, said on Monday that Raiffeisen was still interested in the Kazakh market and also hoped that acquisition prices were coming down.

"We remain intrinsically interested in that market, although one has to recognize that it is a large country with a small population, so one would not want to overpay," Butler said.

"There is a much more sober assessment of real value in Kazakhstan now," he said.

(For summit blog: summitnotebook.reuters.com/)