14 Oct 2009 19:01

VTB could shut unprofitable overseas banks down

MOSCOW. Oct 14 (Interfax) - The VTB Group could shut its overseas banks down if they do not show profit, the bank's first deputy chairman, Vasily Titov, told Interfax.

Titov said VTB would develop its overseas subsidiaries on condition they are profitable, and that only the banks in France and Germany were so far showing profit.

"We recently had a big meeting with the overseas banks, and gave a clear signal: we no longer have any reasons other than economic ones to preserve these banks. The times to keep the political flag flying at any cost have passed. The only reason to preserve their status is their financial results, and if they don't produce we'll reorganize them, and some of them might even be shut down," he said.

"They have until the end of 2010 to show profit. They will also have to achieve a certain return on capital in the mid-term. If 15% is acceptable for VTB, then 12%-15% is right for the subsidiaries," he said.

"Our banks in France and Germany continued to show profit in the first half, but things are not as simple with our Austrian bank," he said.

VTB is also thinking of expanding into the markets of Kuwait, Oman and Saudi Arabia, Titov said.

"We recently opened an office in the UAE, and are now thinking of opening offices in Kuwait, Oman and Saudi Arabia. I think this might happen as early as the first half of next year," he said.

Titov said VTB was interested in markets with high liquidity. "This is why we're looking at the Arab markets as well as China and Hong Kong," he said.

VTB will be winding its operations down in countries where there's no growth platform, he said. The group recently shut its operation in Namibia down, and it is thinking of funding projects in Angola without the participation of Russian clients as the later are not showing much activity.

"The situation is such that our clients are not always working in all the countries where we have a presence. So we recently de-capitalized the company in Namibia. In Angola we are looking at financing some projects without the involvement of our Russian clients [the possibility exists there to develop oil business and development projects] and we'll react if we don't find the necessary sources of growth there, possibly by scaling our business down," he said.

VTB does not for the time being plan to expand in the CIS. "We thought about Moldova, Turkmenistan, Tajikistan, but we have put these plans on hold until the crisis is over," Titov said. "For now we think we already have a presence on the region's most promising markets with the best potential for the group's growth," he said.

VTB currently has 13 banks and financial companies outside Russia, including Armenia, Georgia, Ukraine, Belarus, Kazakhstan, Azerbaijan, Austria, Cyprus, Germany, France, Britain, Angola and Vietnam.

It has four branches, in Singapore, India, China and Dubai; and three representative offices, in Italy, China and Kyrgyzstan.