VTB to merge with Crimea's largest bank in 2025
MOSCOW. June 7 (Interfax) - Russian state bank VTB plans to merge with the largest bank in Crimea, Russian National Commercial Bank (RNCB) in 2025, VTB first deputy CEO Dmitry Pyanov told Interfax on the sidelines of the St. Petersburg International Economic Forum.
VTB announced earlier this week that it plans to switch RNCB's office network to its brand. RNCB became part of the VTB Group in March 2023, but still operates as an independent legal entity with its own banking license.
"This is a systemically important bank for Crimea, with a market share of 70-80%, while the number of its clients is equal to Crimea's population in the peak season. It is integrated with its digital system into the system of schools, hospitals, public transport, and it primarily serves retail clients. The best means of integration without losing the clients of such a bank is a legal merger," Pyanov said.
"However, a legal merger with [VTB subsidiary] BM Bank is negative because [RNCB] is a fully operating lending institution. BM Bank is being restored, operationally inactive, so the working scenario is to merge RNCB directly into VTB in 2025. We will try to do a legal merger because this is the only means of a quick and painless transfer for clients without losses," Pyanov said.
"The decision to consolidate RNCB is based on several aspects. Firstly, VTB is interested in some of RNCB's products, such as its digital system. This will be mutually beneficial, this is good for our retail strategy. Secondly, there is synergy on costs. There are 30% more expenditures than there could be. And a very important factor is import substitution. And RNCB is very important for Crimea and has critical infrastructure that requires import substitution," Pyanov said.
"Merging RNCB on the model of Otkritie [Bank] will not work out due to the particulars of the customer base and unique products," he said. Otkritie Bank will be merged with BM Bank, which will subsequently become part of VTB.
Switching RNCB's network to the VTB brand is also necessary due to growing competition on the Black Sea peninsula's banking market, Pyanov said.
"Federal players will enter Crimea and are already going there. There is an order from the president to enter new regions. VTB branding is needed," he said.
RNCB was Russia's 26th largest bank by assets at the end of the first quarter of 2024, according to the Interfax-100 ranking.
RNCB and VTB combined their ATM networks in February 2023. VTB began issuing auto loans to Crimea residents in March of this year, and in May it began offering clients mortgages to buy residential real estate on the peninsula.