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Raiffeisen International acquires Ukrainian Bank Aval.

No. 1 position in high-growth market Ukraine. Bank Aval a perfectstrategic fit with existing Raiffeisenbank network and substantial boostto Raiffeisens retail activities.

Vienna-based Raiffeisen International Bank-Holding AG (RaiffeisenInternational) concluded yesterday negotiations to buy the Joint StockPost Pension Bank Aval (Bank Aval) from its current owners. RaiffeisenInternational will acquire a majority stake of 93.5 per cent of BankAval, the second-largest Ukrainian bank. In accordance with an agreementbetween the two parties, the purchase price will not be disclosed. Thetransaction is subject to approval by the Ukrainian National Bank andother relevant authorities in Ukraine and Austria.

Herbert Stepic, CEO of Raiffeisen International, considers thisacquisition a further important step in securing both RaiffeisenInternational''s leading local presence in Ukraine and the group''sleading position in Central and Eastern Europe (CEE):"Ukraine is one ofthe most important markets for us. With this acquisition Raiffeisenbecomes the Number 1 in the country. Bank Aval has a sound economicbasis and an outstanding branch network throughout the country. It fitsperfectly to our existing Raiffeisenbank.

Raiffeisen and Aval to form largest bank in Ukraine

Bank Aval was founded in March 1992. By the end of 2004, it had totalassets of 1,573 million and earned a profit before tax of 38 million. Its return on equity before tax was 32.6 per cent. The bank employed a staff of almost 17,950 and had approximately 1,380 outlets at the end of 2004.

Via its subsidiary JSBC Raiffeisenbank Ukraine Raiffeisen Internationalhas been operating in Ukraine since 1998. With total assets of 627 million as of December 2004 (plus 40 per cent compared to the end of 2003) it was the country''s seventh-largest bank, employing at the end of June a staff of nearly 1,000 in 22 outlets.

Together both banks will form the largest banking group in Ukraine,their combined share in the markets total banking assets amounted to 11.5 per cent at the year-end 2004 (as of 1 July, 2005: 11.9 per cent). Raiffeisen is known for its pioneer spirit and its long-term commitment. We have proven several times that we are a driving force of market innovation. By bringing in the know-how that we gained across the region we will strengthen our leading position in Ukraine, said Stepic. He also added that Raiffeisen International intends to keep the two local banks separate for the time being and merge them later on.

Great potential for the banking industry

According to recently-published data about the banking industry inCentral and Eastern Europe, Raiffeisen International can expectsignificant growth rates in its main business segments corporate and particularly retail banking. Whereas the real growth in the Ukrainian economy in 2004 was 12 per cent, banking sector assets grew by 30 per cent to 19.6 billion. The growth potential for retail banking in Ukraine becomes obvious when one compares thevolume of lending to private customers with GDP. For the Eurozone this ratio is on average about 50 per cent and in Ukraine it is only 4.5 per cent. This growth potential reflects the late start of the retail banking business in Ukraine and the entire Commonwealth ofIndependent States, explained Stepic. Since 1999, we have systematically increased our efforts and regional coverage in the retail business. Today we already serve more than 5.6 million retail customers in the region, Stepic added. With the purchase of Bank Avalthis figure will increase by some 3 million additional clients. Bank Avals client base in the corporate business amounts to 210,000. By the end of 2004, Raiffeisenbank Ukraine was serving 1,400 corporate and 26,000 retail clients.

Raiffeisen International is the steering unit for the subsidiaries ofRaiffeisen Zentralbank Osterreich AG (RZB) in Central and Eastern Europe(CEE). Its shares are traded on the Vienna Stock Exchange. RZB owns 70per cent. The balance is free-float, including shareholdings of theEuropean Bank for Reconstruction and Development (EBRD) and theInternational Finance Corporation (IFC) of about three per cent each.Raiffeisen International operates the leading banking network in CEEwith Network Banks and leasing companies in 16 markets. More than 5.7million customers are served through more than 970 business outlets.

For further information please contact Michael Palzer (+43.1/71707-1504, Lars D. Hofer (+43.1/71 707-1930,


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