Eastern European Banks Eye Moscow

Two Eastern European banking groups announced this month that they will establish Moscow banking ventures, five years after the fall of the Iron Curtain severed industrial and financial ties among the Soviet Union's various republics.

Officials with Bank Gospodarki Zywnosciowej, or BGZ, one of Poland's biggest credit institutions, and a banking consortium with partners from Ukraine, Belarus and Russia, say they have been driven to expand toward Moscow by the needs of their home industries.

But one analyst said the new trade ties that the banks are helping to seal are a world away from the old Soviet payment channels.

"If a Polish bank goes to Moscow, it's no different from a Western bank going to Moscow," said Michael Davey, an East Europe banking expert with the European Bank for Reconstruction and Development in London. "A bank sets up shop abroad because it has customers who are doing a lot of business there."

In the case of Eastern Europe, venturing back to Russia may make good sense, as sales for many goods produced in countries like Poland and Ukraine are hampered by Western perceptions of poor quality. But in Russia these producers find a ready market.

Serving Polish food exporters is the driving force behind BGZ, a Polish state-owned agricultural bank which last week announced its plans for a joint-venture bank in Moscow.

Polish Deputy Finance Minister Ryszard Pazura said at a press conference Thursday in Moscow that two banks in the running for the partnership are Vozrozhdenye and Mosbiznesbank.

"We plan to capitalize the bank at around $10 million to $15 million, and we would like a 51 percent stake," he said. "But the share division will depend on negotiations with our partner."

Pazura said the joint venture will aim to get a full banking license from the Russian Central Bank by 1998, a feat that would make it the first Polish bank venture to get a Russian license.

In a separate deal, top banks from Russia, Ukraine and Belarus signed an agreement in Kiev on March 12 to create a consortium to serve industries selling goods among the three republics.

The consortium would operate through Russia's Kreditimpex, 30 percent of which is owned by Prominvestbank of Ukraine. An undisclosed amount of Kreditimpex will go to the third partner, Promstroibank of Belarus.

The deal marks the first time a Russian bank has ever had a Belarussian shareholder, said sources at Kreditimpex, which reports assets of $18.6 million.