Conversion of VTB loan into shares to raise Tier 1 capital adequacy to 12.5-13%
MOSCOW. July 16 (Interfax) - The conversion of an anti-crisis subordinated loan into preferred shares will increase VTB's Tier 1 capital adequacy to IFRS to 12.5-13% as of October 1 from 10.3% at the end of the first quarter of 2014, a source at the Russian state bank told Interfax.
VTB on Tuesday announced the parameters of the conversion of a subordinated loan of 200 billion rubles that it received from state lender Vnesheconombank (VEB) during the 2008-2009 financial crisis. The preferred shares will be issued to Russia at a price equal to the par value of 0.01 rubles.
"The group's core capital adequacy to IFRS will increase to 12.5-13% as of October 1," the source said. The figure was 10.3% as of March 31. The bank plans to release data for the first half at the end of August.
The Russian authorities in May allowed the largest banks to convert anti-crisis subordinated loans received from VEB into preferred shares in order to increase their Tier 1 capital and thus meet growing demand for loans from companies unable to borrow on capital markets due to sanctions against Russia.
