Zuno Bank reported to be heading into hands of Russian oligarch

According to some Czech reports, the deal selling small Czech and Slovak bank Zuno Bank to the second richest Russian oligarch just needs to be inked. Michail Fridman usually targets energy and telecoms assets, so the possible Czech connection raises some questions.

Photo: Kristýna Maková

When the privatization of the big Czech banks was being rounded off around a decade ago, there surfaced a theory in the domestic media that the outcome, with the big Czech retail banks in French, Austrian, and Belgian hands, was not at all bad. The diversity would result in more competition, it was declared.

There followed around 10 years of grumbling about high banks charges, closet cartel agreements between the big banks, and complaints about the enormous dividends repatriated back to the parent banks.

Diversity of ownership might not be what it was one made out to be, but more of it seems to be on the horizon according to latest reports in the Czech media. We are not talking about one of the big retail banks here but the struggling start-up Zuno Bank.

According to Czech newspaper Lidové Noviny, the deal has been done between Austrian-based Raiffeisen Bank International (RBI) and Russia’s Alfa Group for the sale of the Czech and Slovak operation to one of Russia’s richest businessmen. All that is lacking are the final signatures and that is seen as a formality.

Zuno Bank was a low-cost start up bank, partly based on Internet banking, which was initially expected to grow legs and expand outside the Czech Republic and Slovakia. The expansion did not eventually happen and although Zuno Bank has around 250,000 clients it is also estimated to have cost its Austrian parent company around 2.5 billion crowns in accumulated losses.

RBI is currently not commenting out of Vienna on the Czech media reports or the timetable for offloading Zuno Bank. Some earlier reports, it should be noted, put Cetelem, the Czech loans provider owned by French bank BNP Paribas, as one of the frontrunners to buy Zuno and realise its ambition of becoming a fully fledged bank.

Russia’s Alfa Group is the vehicle for Michail Fridman, reckoned in 2014 by Forbes’ experienced calculators to be Russia’s second richest man. The group was set up in 1989 and has telecoms and energy amongst its main activities.

Opinion appears to be divided as to whether Fridman is currently among one of the favoured oligarchs of Russian president Vladimir Putin or whether he is not currently flavor of the month with the Kremlin leadership. The latter seems to be suggested by the fact that, unlike some of his peers, Fridman has escaped being on the Western sanctions blacklist over the Crimea annexation and ongoing conflict in Ukraine.

But a rather different perspective of doing business with Mr. Fridman seems to stem from the anxiety with which British authorities have responded to his ambition to buy up North Sea oil and gas assets. The British Department of Energy has sought to curb the purchases on energy security grounds with the final outcome still undecided as the Russian group considers its response. Fridman’s group, LetterOne, has proclaimed the ambition to be a global player on oil and gas markets. What the ambitions are in the Czech Republic starting out as a small player on the banking market is not easy to discern.