An AIM-quoted investment vehicle that invests in small- and mid-sized private companies in Russia has purchased Volzhski Universalny Bank (VUB) to increase its presence in the country’s retail financial services sector.

An AIM-quoted investment vehicle that invests in small- and mid-sized private companies in Russia has purchased Volzhski Universalny Bank (VUB) to increase its presence in the country’s retail financial services sector.

The RUB297.5 million (£6.4 million) acquisition of VUB was made through Aurora Russia’s Cypriot holding company, Flexinvest. The sum was used to make an initial payment of RUB210 million (£4.5 million), the balance of which is being invested into the bank to cover post-acquisition infrastructure costs and fund ongoing operations.

The deal, approved by the Central Bank of Russia, will provide Aurora Russia with a retail banking platform that will focus primarily on mortgages. VUB’s retail products are to be distributed through Kreditmart, the loan supermarket owned by Aurora Russia.

Aurora Russia director James Cook comments: “Given the market dynamics and growth projections of Russia’s retail finance market, acquiring a banking platform is a natural investment decision to make. This acquisition comes at a time when the mortgage market in Russia is set to double in size this year.”

According to the Central Bank of Russia, compound annual growth of 123 per cent was recorded in the retail banking market between 1999 and 2006. With the implementation of banking reforms taking effect, the sector will benefit an economy where there is rising demand for banking products and credit.

VUB focuses on the retail banking segment, offering small business lending, cash services, current and savings accounts, and loans from its base in Samara, Russia. Last year, the bank posted RUB263 million in assets (£5.7 million) and profit of RUB19 million (£410,000).