29 Nov 2010 11:17

Bank of Moscow to re-elect board in Feb, VTB closing in on deal - sources

MOSCOW. Nov 29 (Interfax) - No.2 Russian lender VTB could be moving a step closer to buying the City of Moscow out of Bank of Moscow , whose shareholders will hold an EGM to elect a new board of directors in February, a source in banking circles told Interfax.

"The board met on Thursday, officially kicking off the campaign to raise VTB's stake in Bank of Moscow. The EGM is scheduled for February 21," the source said.

Bank of Moscow confirmed that shareholders would be asked to elect a new board on February 21.

Another source said VTB wanted control of Bank of Moscow and that the City of Moscow was prepared to sell its whole 46% stake in Russia's fifth biggest bank.

"VTB is thinking of buying the whole stake, and the City is willing to sell it. It needs money, not non-core assets," the source said.

Changes in the ban's management could take place before then: Mikhail Kuzovlev, first deputy president of VTB, could be appointed to the same post at Bank of Moscow, the source said. VTB is also looking to install Dmitry Titov, currently first deputy chief executive at National Reserve Bank, in Bank of Moscow's management board.

Bank of Moscow and VTB declined to comment.

The City of Moscow owns 46.48% of Bank of Moscow. Borodin and his business partner, Lev Alaluyev, own 20.37% between them, subsidiaries of Capital Insurance Group own 17.1%, Goldman Sachs owns 3.9% and Credit Suisse owns 2.8%.

Rumors that the bank might change hands started to circulate as soon as Yury Luzhkov was ousted as mayor and replaced by Sergei Sobyanin. VTB has been named as a possible share buyer.

The possible sale of the City of Moscow's stake in Bank of Moscow to VTB is currently under discussion, Deputy Prime Minister and Finance Minister Alexei Kudrin told journalists on November 24. "The issue of VTB's purchase of Bank of Moscow is being discussed. No decision has been made," he said, adding that VTB might purchase Moscow's entire 46% stake in the bank.

"We are interested in the entire stake, 46%," he said.

Bank of Moscow was Russia's fifth largest by assets, according to the Interfax-100 ranking at the end of Q3 2010. VTB was the second biggest.