Conversion of VTB preferred shares hinges on valuation, legal niceties, not happening in 2025 - exec
ST. PETERSBURG. July 3 (Interfax) - The conversion of VTB preferred shares into common shares hinges on their valuation, the terms of issue and rules for investing money from the National Welfare Fund (NWF), so this is not a matter for 2025, VTB first deputy CEO Dmitry Pyanov told Interfax on the sidelines of the Central Bank's Financial Congress.
Pyanov said last week that in the long term VTB will look for ways to simplify its capital structure, which now consists of both common and preferred shares.
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 preferred 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 during the 2009 financial crisis.
VTB issued Type 2 preferred shares totalling 307.4 billion rubles to the Deposit Insurance Agency (DIA) as part of a recapitalization program using OFZ federal bonds in 2014-2015. Prime Minister Mikhail Mishustin signed an order this week for these preferred shares to be transferred from the DIA to the state treasury.
Speaking the possible timeframe for converting preferred shares into common ones, Pyanov said this will certainly not happen in 2025.
"The person who solves the problem of turning preferreds into common shares deserves a bronze bust at the entrance to Federation tower," he said.
When it comes to conversion, there is the problem of appraising the value of preferred shares, which are completely owned by the government, he said.
"How much are our preferreds worth? It's an open question, since they're not listed, although they have a certain par value. In addition, preferreds are nonconvertible, which is another legal problem. And there's one other thing. Part of the preferreds are NWF resources, and there is also this matter regarding the rules for investing the fund's resources," Pyanov said.
