VTB to consider simplifying capital structure in future - first deputy chairman

MOSCOW. June 26 (Interfax) - VTB will in the long term look for ways to simplify the structure of its capital, which now consists of common and preferred shares, but the final decision will be up to the bank's principal shareholder, the state, VTB first deputy CEO Dmitry Pyanov said.

A substantial portion of VTB's capital is in the form of two types of preferred shares totalling 521 billion rubles, dividends on which are variable and determined every year separately. The bank issued Type 1 shares totalling 214 billion rubles to the Finance Ministry as part of the conversion of a subordinated loan extended to VTB from the National Welfare Fund (NWF) during the 2009 financial crisis. Type 2 preferred shares totalling 307.4 billion rubles were issued to the Deposit Insurance Agency as part of a recapitalization program using OFZ federal bonds in 2014-2015.

"We realize that preferred shares are an additional complication in our capital structure. No one understands how to factor them in when calculating price to book value, how to factor in when calculating the dividend stream. Essentially, a simplification in assessment takes place in order to...Our stock market is now steered by the retail investor, after all, and the retail investor likes simplicity, so strategically my ideal image is that our whole capital will be represented by common shares," Pyanov said on TV channel RBC.

"But conversion or some sort of transformation, another form of transformation of preferred shares is a question for the shareholder, the desire of the shareholder. This cannot be done by the decision of the actual issuer," Pyanov said, adding that converting preferred shares is a technically complicated issue.

The bank will not change its capital structure in the short term. "Long term, we will always look for solutions to simplify the capital structure. I can't say at this point when a solution that satisfies all parties will be found," Pyanov said.

Russia's Federal Property Agency now owns 61.8% of VTB. Azerbaijan State Oil Fund and Qatar Holding LLC were also large shareholder of the bank. Current information about VTB shareholders was classified due to the imposition of sanctions against the bank by the United States, European Union and United Kingdom.