UPDATE 1-Erste Bank to buy Ukraine's Bank Prestige in full

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Austria's Erste Bank der oesterreichischen Sparkassen will buy Ukraine's Bank Prestige in full for $104 million, Erste said on Wednesday, in a bid to expand beyond its central European stronghold.

Erste, eastern Europe's second-biggest lender, is buying into rapidly growing Ukraine as growth in its central European markets is slowing. Analysts expect credit volume in Ukraine to grow by around a quarter per year until 2010.

Erste originally said in July it would buy 50.5 percent of Prestige, a small bank founded only a year ago. At the time it said it would pay $35.3 million for the stake, or 1.2 times Prestige's book value.

The price it has agreed to pay for the full stake in Prestige with its 15 outlets and 300 employees is equivalent to 1.75 times book value -- a moderate price compared with other deals in the region.

Erste agreed to pay six times book value for Romania's BCR last year. Hungary's OTP in June paid 4.7 times book for Raiffeisen Ukraine. Raiffeisen International paid 3.7 times book last year for Ukraine's biggest bank Aval.

Erste will also spend up to $300 million until 2010 on top of the purchase price to support the business, it said in a statement. Completion of the deal is expected in January and the bank will be rebranded as Erste Bank Ukraine, it said.

Approval by Ukraine's central bank and Austria's banking watchdog have already been obtained for the takeover, it said.

Shares in Erste Bank were trading down 0.2 percent at 57.89 euros by 0837 GMT, underperforming the central Europan banking index , which was up 1.1 percent.

They have gained 23 percent so far this year, and value it at 2.5 times book value.

[VIENNA/Reuters/Finance.cz]