Buy a Billion for €230 Million. RBI`s Sale of Priorbank Enriches Businessmen of Fortune under Lukashenko

From left to right: Alexey Alexin, Alexander Zaitsev and Nikolay Vorobey — people who control gigantic capital. Collage by Nasha Niva

On September 20, the Austrian RBI Group (Raiffeisen) announced the final stage of selling its stake in Priorbank to the Emirati company SOVEN 1. The Austrians owned 87.74% of the bank.

This deal has been a long time coming, it is still not completed, but it is unlikely to be cancelled.

The deal has several features that indicate that behind the Emirati shell is actually hiding one of the "lucky businessmen" under Alexander and Viktor Lukashenko. Namely: either Nikolai Vorobey, or Alexei Aleksin, or Alexander Zaitsev.

The opinion that one of these people is behind the new owner of Priorbank is also shared by the financial and banking community of Belarus.

There is no direct evidence yet, but we have collected indirect arguments in favor of this version. And there are more than enough of them.

The nature of the deal is extremely advantageous for the new owner

In a fresh announcement on September 20, RBI Group stressed that it expects a €300 million loss due to the difference between the sale price and the book value of Priorbank, as well as a €500 million negative impact on the group's consolidated profit.

The second figure in this message can be omitted — RBI Group wants to say that the group's European banks and leasing companies also earned money from their relations with Priorbank, but will now stop doing so.

But the first figure — €300 million — allows us to estimate how much the bank was sold for, how fair the price was, and how this could have happened.

First of all, how do you calculate the value of a bank? Financial institutions have specific accounting and asset structure: a lot of money, but most of it is borrowed, and there are no means of production in the industrial sense.

Therefore, there is no universal method; specialists are familiar with dozens of calculation methods. Depending on the circumstances, some rely on the results of past years, others discount future profits, others look at profit per share, assess goodwill (reputation), and so on.

According to all assessment criteria, Prior appears to be a very strong organization: the largest private bank in the country and the second most profitable after Belarusbank.

Priorbank's 1,700 employees generate truly large profits — around one hundred million euros per year.

The bank is also one of the few that has a unique competitive advantage — the ability to make foreign currency payments.

In addition, in recent years Priorbank has accumulated a large amount of its own funds.

Due to the political situation, the Austrian shareholder, as can be seen from the financial statements, was not allowed to withdraw dividends, so the bank accumulated profits for several years.

By the end of 2023, it had collected approximately €410 million, and net assets thus reached approximately €520 million.

It can be assumed that net assets continued to grow this year, as the bank showed a profit of 76 million euros for the first half of 2024 (this also correlates with the previous estimates of the Austrians: they previously estimated the losses from the deal at 225 million euros — this is less by exactly the amount equal to the profit for the first half of 2024).

Thus, returning to the final formulation of the Austrians about the loss of 300 million on the ratio of the final price to the book value, we can estimate that the new owner acquired approximately €530 million (87.74% of the share) for approximately €230 million. This is the economics of the field of miracles.

Only hopeless, unfortunate companies on the brink of bankruptcy, for which it is difficult to find a buyer, are sold at a discount of half of their assets. The prosperous Priorbank does not fit this description.

In a normal situation, the price calculation should start from 600 million euros and be calculated not with a large discount, but with a significant premium to the book value, which would take into account a profitability close to 30%, as well as such intangible assets as market share, reputation, brand, employee qualifications, etc. A normal market multiple in these conditions would be under 2.

The price of Priorbank would then be approximately one billion euros.

Looking back at past more or less similar deals on the Belarusian market, we will not see examples when even less strong banks were bought at such a predatory discount.

For example, Sberbank bought the more modest and less profitable BPS-Bank for $280 million with a premium of 1.3 to the size of assets. VTB bought Slavneftebank in parts, but also with a small premium.

Another example of comparison is the Luminor bank, which operates in the Baltics. Its sale to the Hungarian OTP group is currently being discussed.

Luminor is 6.5 times larger than Priorbank, but less efficient and generates only 2-2.5 times more profit. How much is it valued at? The indicative price is €1.8 billion, with a coefficient of 1.2 to net assets.

Thus, we see an unnatural selling price, which can only be partially explained by the market situation, which we will discuss later.

Павялічыць

The founder and permanent head of Priorbank, Sergei Kostyuchenko, was sentenced to 3.5 years in prison in July 2022. According to Nasha Niva, more than $10 million had to be paid for his release. Photo: bspu.by

Lack of competition for the asset

RBI Group's desire to transfer virtual money in Belarus into real money in another jurisdiction seemed natural, and the group itself announced its intention to leave the toxic market under pressure from the Americans.

Otherwise, a situation could arise in which the bank, at best, would simply operate without the possibility of withdrawing dividends from it, and at worst, the state would begin to nationalize profits through fines, as is already happening with the Austrian A1.

Therefore, many financiers guessed that such a tasty asset could potentially be bought not with a naturally large premium, but cheaper. In such a situation, intense competition would be natural, and there were signs of it — even the head of Rosneft, Igor Sechin, expressed his intention to acquire Priorbank.

But, as Nasha Niva’s sources believe, he and other Russian interested parties were given to understand that the Priorbank issue would be resolved among domestic players.

There was no market competition that could regulate the price.

"It looks like there was one seller and one buyer from the very beginning, and the rest were simply cut off, setting a condition for RBI Group that if you want to exit, you sell only to this one and only this way. And if you act in your own way, we simply will not allow the deal to be completed. If they were selling to Russians or Arabs, I see no reason for such a big discount," one of the Minsk bankers expresses his opinion.

It is worth recalling that the founder and permanent head of Priorbank, Sergei Kostyuchenko, was sentenced to 3.5 years in prison in July 2022. Negotiations on the sale of the bank began when he was in prison. According to Nasha Niva, more than $10 million had to be paid for his release.

The buyer does not reveal himself

There have been no cases in the history of Belarus where such a significant bank was bought out anonymously. Traditionally, but not often, only the amount of the deal could be hidden.

BNB was bought by the Bank of Georgia, RRB-Bank by the EBRD, BPS by Sberbank, Slavneftebank by VTB, Belrosbank by Alfa-Bank, Paritetbank by Lukashenko’s Administration, and so on.

And who is buying Priorbank? It is said that it is an Emirati investor. But not some local bank or fintech, but the recently created Soven 1 Holding Limited.

It cannot be said that this is a stable financial company that views the acquisition of Priorbank as a logical step in its development. It cannot even be said that this is any kind of specialized organization: Soven 1 was created at the very end of 2022, and its declared type of activity is “other activities”.

The company does not have a website, and searching in English and Arabic does not reveal any information about the commercial activities through which it generated its capital. Moreover, as early as early 2024, RBI Group stated that it was waiting for confirmation of the investor's funds.

In other words, Soven 1 looks like a front company to back up a single deal that was funded from elsewhere. So there must be some reason why the real buyer was embarrassed to act on behalf of their main companies.

At the same time, one can note the trend of anonymizing their assets on the part of Vorobyov, Aleksin and Zaitsev. Since 2020, they have been transferring their property to fictitious persons, including managers and relatives.

The man who speaks on behalf of SOVEN 1, former mid-level bank manager Suhail al-Otaiba, is also unlikely to have earned hundreds of millions of dollars during his career, judging by his biography. Therefore, given all the circumstances, he can hardly be perceived as a real, rather than nominal, beneficiary.

A narrow circle of people who can afford to buy such a bank

In Belarus, there are only a couple dozen people who can theoretically afford an investment of two hundred million euros.

But in reality, most Belarusian multimillionaires are not so by the amount of cash, but by the estimated value of their assets — real estate, companies, production facilities, etc. Accordingly, in order to turn material assets into money and transfer them to the UAE to finance the deal, such people would need to sell part of their business in Belarus.

Belarusian bankers interviewed by Nasha Niva claim that they have not observed any transactions of the required scale over the past two years.

In addition, it is currently difficult to profitably sell an asset in Belarus, and such a move without an absolute guarantee that the buyout of Priorbank will be successful would essentially be a pure adventure.

At the same time, the financial situation is different for the “lucky businessmen”, who mainly earn money through grey schemes, the prerequisite for which is a relationship with Alexander Lukashenko and his family, as well as permission to resell the products of state enterprises.

It is these people who are believed to have become the main beneficiaries of the sanctions imposed against Belarus and in recent years have been receiving super profits from schemes to circumvent them.

In such a situation, these people are bound to accumulate cash, especially in semi-transparent jurisdictions like the UAE, which are used for transactions under sanctions.

The same Nikolai Vorobey is considered by Minsk financiers to be the richest man in Belarus in terms of cash.

In addition, banking is on the list of interests of at least Nikolai Vorobyov and Alexey Aleksin: they have the necessary competencies and have already been involved (probably continue to be involved, but on behalf of nominees) in the banking business. Vorobyov owned Absolutbank, Aleksin owned MTB.

In 2020, Nikolai Vorobey tried to buy the Ukrainian BTA Bank, but Ukraine opposed and blocked the deal.

Who are Vorobey, Aleksin and Zaitsev?

Павялічыць

Nikolay Vorobey. Archive photo

Nikolai Vorobey is a native of Ukraine. He made his first big money around Naftan in the 90s. His career is believed to have been aided by his kinship or close relationship of a different nature with "Putin's godfather" Viktor Medvedchuk.

Vorobey was considered a front man connected to Medvedchuk in a number of deals in Ukraine, in exchange for which he was able to use his patron's connections in Russia to distribute oil export quotas favorably.

Vorobey's main business is the export of refined petroleum products in Belarus, a sector that only a few people have been allowed to enter in the country in recent decades. Vorobey also has interests in logistics and banking.

Павялічыць

Alexey Alexin. Archive photo

Alexey Aleksin began his career as a manager in the empire of Yuri Chizh, and was responsible for everything related to oil and Naftan.

His first big success is said to have been the operation with the export of "solvents". After falling out of favor with his former boss, he became the owner of a significant part of his legacy, and acquired interests in tobacco, logistics and banking.

Павялічыць

Alexander Zaitsev. Photo Tut.by

Alexander Zaitsev is a former assistant to Viktor Lukashenko, a business partner of Aleksin and Vorobyov, and a co-owner of the so-called Orshor, the operator of the Bremino-Orsha special economic zone.

He specializes in logistics, a sensitive topic during sanctions, and in reselling products from state enterprises. He is also a major sponsor of the Catholic Church in Belarus.

Anonymity as insurance against sanctions

If we assume that the buyer was one of the "lucky businessmen" close to Lukashenko, then it becomes clear why the deal was made on a non-competitive basis and on abnormally favorable terms for the buyer. Raiffeisen was forced to let its own people earn money.

RBI Group agreed because for them it was the only real opportunity to turn the inaccessible money collected in Belarus into real money abroad, even at the cost of losing at least half the amount.

The anonymity of the buyer in this case is a must for both the seller and the client, since RBI Group would not be able to openly conduct a transaction with a company or person under US and European sanctions.

This will never be openly acknowledged in the future, as it would mean a deliberate violation of the sanctions regime on the part of Raiffeisen.

Without an official acknowledgement that the bank now belongs to one (or several) of Lukashenko’s close associates, there is no reason to cut it off from correspondent services.

This means that the bank is unlikely to fall under sanctions and will continue to work with foreign currency payments, bringing profit to the new owners and those behind them.

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