VTB looking to buy outstanding Bank of Moscow shares for less than from city - Kostin
MOSCOW. May 16 (Interfax) - VTB , which became Bank of Moscow's main shareholder in a February deal with the Moscow administration, intends to buy up the rest of the stock for less than it paid the city.
"We are working on the price. I think we have grounds to suppose we will be able to acquire the remaining package for less than from the city," VTB chief Andrei Kostin said in an interview with Vedomosti business daily. He did not provide any hard numbers, but did said that the bank's capital adequacy after the acquisition remains over 10%.
"I think some of the shares will come to use together with other assets. In particular, the package the insurance company [Capital Insurance Group, holder of some 17% of Bank of Moscow shares, and in which VTB has a blocking stake] has. The purchase price from those shareholder that recently bought into Bank of Moscow capital [outfits associated with Vitaly Yusufov and Suleiman Kerimov] will depend on the sale timeframe," Kostin said, adding that VTB would like to consolidate all the Bank of Moscow stock.
Both portfolio investors, when they figure selling their stakes is appropriate and understand they have made the required return on their investments, "will definitely be prepared to sell us their packages," Kostin said.
Asked about current relations with former Bank of Moscow President Andrei Borodin, Kostin said that his representatives are negotiating with Borodin's.
"He is the owner of the assets that were acquired on Bank of Moscow credits. We are discussing the issue of either servicing or repaying the credits issued to these organizations, or the transfer of these assets," Kostin said. Together with those assets, VTB may get the Bank of Moscow stake belonging to Capital Insurance Group currently controlled by Borodin, he said.
Bank of Moscow's loan portfolio consists of two parts: regular and investment credits, Kostin said. "The first instance is understood, and the state of the credit portfolio is not cause for concern. The investment credits financed the purchase and development of many enterprises in various sectors, such as timbering, agriculture, insurance, the alcohol industry and movie business. As we understand, a significant part of the bank's investment portfolio of several billions of dollars was issued to Borodin and [his former aide] Dmitry Akulinin for the purchase of non-core assets," Kostin said. "Problems have now begun with servicing the debt to these borrowers. We see a lack of will among the owners to pay bank debts. Moreover, when the former management left the bank they attempted to take assets and nullify debt agreements. Reports of the possible substitution of credit committee decisions are also being looked into," he said.
As to VTB's plans to integrate and develop Bank of Moscow business, Kostin said work is being done on the strategy. "But it is clear to me. We have to consolidate Bank of Moscow's external network, foreign and regional. In Moscow and Moscow Region, we will be moving all corporate-medium VTB business to bank of Moscow. We will be developing retail both at Bank of Moscow and at VTB 24," he said. "The legal entity will be retained. This will be a universal bank. Only the investment business will be developed around VTB Capital, but a certain group of co-workers will be retained," he said.
