Home Credit Group, PPF's consumer lending arm, which is also active in Russia and Kazakhstan, signed an agreement to purchase PrivatInvest bank for $18 million (395 million Kč) Aug. 20.

Home Credit had acquired Agrobank and nonbanking financial institution PrivatKredit in late July.

All three deals are subject to approval by the Ukrainian Anti-Monopoly Office and the National Bank of Ukraine.

Entering the market has a great potential for Home Credit's business, analysts say.

"The Ukrainian market is more interesting for them than the Czech market," said Petr Bártek, an analyst at brokerage firm Cyrrus. "Competition on the Czech market is fierce, and business here does not offer high profit margins. They are definitely doing it at the right time."

Finding a niche

Home Credit's acquisitions will help the group carve a niche in Ukraine's consumer lending market, which started developing about two years ago and still has great growth potential, according to analysts.

In April, Ukrainian consumer lending — excluding mortgages and auto leasing — amounted to 7 billion hryvnias ($1.4 billion/30.7 billion Kč) or 1.8 percent of the country's gross domestic product, according to Taras Volobuyev, business development manager at Delta-Bank, which controls up to 25 percent of the country's market in terms of issued consumer loans.

The market grew 26 percent in 2004 and 71 percent in 2005.

Volobuyev said that although the market is still in the initial stages of development, financial institutions are being very aggressive in acquiring customers and some niches have already been filled.

"Newcomers will have a hard time trying to carve space for themselves among established players," he said.

The market now attracts many foreign investors. For example, Austria's Raiffeisenbank bought a 93.5 percent stake in Ukraine's leading bank, Aval, in October 2005. Russian bankers call the country their most important foreign market.

Expansion plans

Volobuyev said Home Credit may focus on services that are still gaining popularity in Ukraine, such as credit cards, auto leasing and mortgages.

"Cars and housing are in great demand now," he said.

The financial institutions Home Credit acquired are not included in the top 20 of Ukraine's 136 banks. PrivatInvest ranks 101st and has a dozen branches.

PrivatKredit, however, provides consumer loans under a strong brand, Prosto kredit, and has a developed network of 450 branches and more than 1,000 contracts with popular store chains, which may help Home Credit to establish itself on the market.

"The fact that Home Credit bought a developed network of outlets is a very big plus," Volobuyev said. "It is difficult to develop a network from scratch."

Analysts expect that Home Credit may merge the three companies.

Home Credit Group CEO and PPF board member Ladislav Chvátal said in a press release that the company plans to utilize synergies stemming from its presence in the region.

"In the near future, we aim to make Bank Agrobank one of the country's leading financial institutions specializing in consumer loans," Chvátal said.

PPF spokeswoman Dita Fuchsová, however, denied any merger plans and said PPF will continue to be involved in retail financial services, including consumer lending, and insurance services.

PPF is considering initial public offerings for some of its companies, including insurer ?eská pojis?ovna and Home Credit, and will put the money toward financing its expansion plans in Ukraine, but no dates have been set, according to Fuchsová.