Private Russian banks, MDM Bank and URSA Bank, have announced the two will merge, to form the second largest private bank in Russia, in the latest consolidation move in Russia’s banking sector.

The combined bank will encompass more than 500 branches across Russia, with combined assets worth $19 Billion and a capital of $2.8 Billion.

The merger will see Igor Kim, Chairman and shareholder in Novosibirsk based URSA, merge his stake with Moscow based MDM’s owner Sergei Popov, in a holding company which will control more than 60% of the new bank. The holding company will include board members from minority shareholders in the two banks, including the International Finance Corporation and the European Bank for Reconstruction and Development.  MDM Bank Chairman, Oleg Viyugin, will become the Chairman of the holding company, with Igor Kim becoming CEO of MDM bank during the transition period, with responsibility for the integration, and current MDM CEO, Igor Kouzin, becoming CEO of the holding company.

The merger process is expected to take up to 18 months during which time the banks will continue to operate independently.

Speaking with RT, Kouzin said the merger would enable the new bank to capitalize on opportunities in Russia's rapidly changing banking sector, and was not simply a response to the credit crisis.

“The combination in a certain way is actually going to help the bank – utilize the opportunities that arise because of the changes in the environment, and the opportunities are quite substantial I must add. The Russian banking system is going to go through an unprecedented restructuring I believe, and we’re going to see a completely new composition of leaders probably in a one to two year timeframe.” 

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