Categories: Entertainment

Russia’s No.2 lender VTB to buy rescued Otkritie Bank for $4.7 billion

© Reuters. The logo of Russian bank Otkritie is seen at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 15, 2022. REUTERS/Maxim Shemetov

By Alexander Marrow, Elena Fabrichnaya and Maria Kiselyova

MOSCOW (Reuters) -The Bank of Russia on Thursday agreed to sell bailed-out Otkritie Bank to the country’s No.2 lender, state-owned VTB, for 340 billion roubles ($4.7 billion), in a deal expected to close by the end of the year.

The transaction consists of 233 billion roubles in cash and the remainder in OFZ treasury bonds, the central bank said. VTB’s Moscow-listed shares were up 2.8% as of 1155 GMT.

The central bank bailed out Otkritie, once Russia’s largest private lender, in 2017 as part of a years-long campaign to clean up the country’s banking sector.

Otkritie had previously been linked with a possible sale to Italy’s UniCredit or even a public stock market launch before sanctions torpedoed plans for anything more than a domestic transaction.

The central bank and VTB said in separate statements they had agreed to transfer all the shares in Otkritie by Dec. 31, subject to VTB paying in full.

While dominant lender Sberbank has turned a monthly profit this quarter, VTB, which has fallen under some of the toughest sanctions imposed by the West on Russia’s financial sector, is struggling, something that had raised doubts about the long-awaited Otkritie purchase.

“VTB appears to be experiencing specific capital problems,” Alfa Bank senior analyst Evgeniy Kipnis told Reuters. “Based on recent statements from VTB Bank’s CEO, due to sanctions, the bank has frozen assets abroad worth around 600 billion roubles.”

“That is 27% of the bank’s capital,” Kipnis said. “It is obvious that the bank needs additional capital in connection with this.”

Earlier this month, VTB said it had temporarily suspended coupon payments on a number of subordinated bond issues, a move approved by the central bank.

CONFLICT OF INTERESTS RESOLVED

The central bank had been keen to sell. Governor Elvira Nabiullina said last Friday it was not normal for the regulator to also own a bank.

“This deal will ensure the development of the banking sector without the involvement of the central bank as owner,” Nabiullina said.

The central bank said its bail-out investment was 555 billion roubles and that the deal, taking into account dividends, would give it a refund of 352 billion roubles.

VTB said nothing would change for Otkritie clients in the near future and that it would develop a plan to integrate Otkritie’s business after the transaction closes.

“Independent assessor DRT assessed (Otkritie’s shares’) market value in the range of 328-374 billion roubles,” the central bank said.

Otkritie and its group of companies have previously been valued at up to 400 billion roubles.

VTB said Otkritie President Mikhail Zadornov would leave the company on Jan. 1. Former UniCredit Bank Russia chairman Mikhail Alekseev will be nominated in his stead.

($1=72.3200 roubles)

Read More

Nicole Cherie Hesse

Nicole Cherie Hesse is a Journalist at Flaunt Weekly.

Recent Posts

Three Years Later, Universal Music Settles Trademark Lawsuit Filed Against Investment Platform Republic

Flaunt Weeekly Flaunt Weeekly More than three years later, Universal Music Group (UMG) and the…

2 hours ago

Haiti’s budding musicians hold concert amid ongoing gang violence

Flaunt Weeekly Around the world, it’s time for year-end school concerts and Haiti is no…

4 hours ago

Review: Ada Pasternak gets personal and deep in her ‘I Wish I Never’ music video

Flaunt Weeekly There was Pasternak. Photo Courtesy of Ada Pasternak.Singer-songwriter and multi-instrumentalist Ada Pasternak released…

4 hours ago

‘His death is a great loss’ – President Higgins pays touching tribute to Irish music star’s father after tragic passing

Flaunt Weeekly PRESIDENT Michael D Higgins has paid tribute to the father of a member…

10 hours ago

Hozier Plays the Pogues’ “Fairytale of New York” on Saturday Night Live: Watch

Flaunt Weeekly Hozier returned to Saturday Night Live for the NBC program’s final pre-Christmas episode…

11 hours ago

Our Favourite Queer Artists Made Billboard’s 2024 Top Pop Stars List

Flaunt Weeekly Chappell Roan, Charli xcx and Billie Eilish have all made Billboard’s 10 Greatest…

11 hours ago