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Report: Uniastrum, Orient Express Bank suspend merger talks

negotiations betweenCommercial Bank Uniastrum(LLC) and PJSC OrientExpress Bank were suspended due to asset-quality issues at bothbanks, Kommersant reported Sept. 26,citing market sources.

Russia'scentral bank has not yet approved the merger as it is not clear how thelenders' shareholders plan to solve the asset-quality problems, which would notautomatically disappear once the two banks have been combined, the news reportsaid. It added that the merger process has also beendelayed because shareholders cannot agree on the ownership structure of themerged entity and on which of the two lenders should act as the acquiringparty.

Analystscited by the newspaper are also concerned about the lack of merger synergiesbetween retail-lending-focused Orient Express and Uniastrum, which caters tosmall and medium-sized businesses.