Barclays Completes Expobank Purchase

Barclays, Britain's third-biggest bank, on Monday acquired Russian lender Expobank for $745 million in its first overseas acquisition since losing the bidding contest for ABN Amro.

Barclays agreed to pay cash for Petropavlovsk Finance's 100 percent stake in Expobank, Barclays said in a statement. Expobank has 32 branches concentrated in western Russia, including St. Petersburg and Moscow.

Barclays already operates in Russia through its investment banking unit, Barclays Capital. Barclays is paying about four times Expobank's book value of $186 million.

"It looks like they are paying a big number, but you have to keep it in perspective of the size of the group," said James Hutson, a London-based analyst at Keefe, Bruyette & Woods. "It has strategic rationale and shows the direction they are going," said Hutson, who rates Barclays "market perform."

Expobank, with one of the largest networks of automatic teller machines in Moscow, had assets of 29.8 billion rubles ($1.24 billion) as of Jan. 1.

Barclay's purchase of Expobank is the latest in a string of acquisitions by European banks. Societe Generale, France's second-biggest bank by market value, boosted its stake in Rosbank, Russia's eighth-biggest, to more than 50 percent last month from about 20 percent and said it would increase its holding to 58.7 percent.

UniCredit, Italy's biggest bank, raised its stake in International Moscow Bank to 100 percent in June. Raiffeisen International Bank, Austria's biggest by market value, paid $550 million for lender Impexbank in 2006, making it the country's largest foreign bank.

The acquisition of Expobank represents a "great opportunity" as Barclays seeks to be become "one of the leading retail and commercial banks in Russia," Frits Seegers, head of consumer lending at Barclays, said in the statement.

Barclays expects to complete the transaction by this summer and generate profit on the acquisition by 2011, according to the statement.