7 Jun 2022 15:12

Alfa-Bank Ukraine may change brand, raise $1 billion from shareholders

MOSCOW. June 7 (Interfax) - The board of Alfa-Bank Ukraine will offer the shareholders to change the brand of this credit organization, said former Bulgarian Finance Minister Simeon Djankov, who was given the right to vote on the bank's majority stake with the National Bank of Ukraine's (NBU) consent in mid-April.

Djankov told reporters that soon after February 24 the board adopted a decision to stop using the Alfa-Bank brand.

The decision to rename the bank has been made by the bank's Ukrainian management, and a decision of a shareholders' meeting, functioning state registries and relevant notarial actions are required to put it into practice, he said.

"As soon as the registries reopen and there is an opportunity to implement this decision from a legal standpoint, a part of my function will be to steer necessary decisions through the annual shareholders' meeting. I currently represent the majority of votes at this meeting," Djankov said.

When asked about a new brand, Djankov said that several names are under consideration, but the bank will announce its final choice later.

Another central issue to be raised at the shareholders' meeting is the bank's additional capitalization of $1 billion from shareholders' funds, which are expected to be exempt from Ukrainian sanctions for this purpose, he said.

"The Ukrainian bank... was always and remains independent of the Russian, Belarusian, Luxembourg bank, etc. [...] The same name is indeed a hurdle. That's why, the Ukrainian team promptly made a decision to change it. It's just that problems with registries and notarial procedures do not allow them to promptly fulfill it from a legal standpoint," he said.

"All painful issues have now been closed. And we saw a tendency toward the stabilization of the liability holdings situation since mid-spring," Djankov said.

When speaking about the bank's additional capitalization, Djankov said that Alfa-Bank Ukraine hopes to receive permission from the Bank of England, the U.S. Treasury and possibly from other regulators soon to carry out its additional capitalization by using the $1 billion subordinated debt from the funds of a number of shareholders targeted by sanctions.

"The shareholders wrote me an official letter at the end of last week that they agree to give this billion. The next step should be to contact the authorities and regulators of the jurisdictions where the shareholders' funds are located, and also the Bank of England and the U.S. Treasury. We need to ask the regulators to withdraw this $1 billion from sanctions, and it will go to increase the capitalization of the bank, to develop the Ukrainian economy," Djankov said.

The amount of the bank's additional capitalization stems from two equal components: the $500 million that will increase the bank's capitalization in the event of a slow recovery of its clients' economic situation, and another $500 million that will be raised to finance the Ukrainian economy's prompt recovery once the Russian military operation is over, he said.

It will be a one-off transaction in compliance with the regulator's permission, he said. Alfa-Bank Ukraine currently fulfills all capital-related requirements of the NBU, he added.

"During the first conversation with the National Bank, I also explained how we came to this $1 billion. It is important for us to become part of the reconstruction of the economy, so I would like not $500 million, but $1 billion [...] In a year or two, we will approach the good and bad bank system to ensure a rapid economic growth. We think that for these purposes another $500 million is needed for our expertise in the bank to work on a new loan program for the development of the corporate sector," Djankov said.

According to Alfa-Bank Ukraine, its largest shareholders currently include Andrey Kosogov, who owns a 40.9614% stake in the bank through a proxy after receiving the 20.9659% and 16.3239% stakes from sanctioned German Khan and Alexei Kuzmichev. Mikhail Fridman's stake is at 32.8632%, Petr Aven's at 12.4018%, UniCredit S.p.A. (Italy) has 9.9%, and Mark Foundation for Cancer Research has 3.8736%. Djankov is the NBU's trustee managing Kosogov's stake and the shares of blacklisted Fridman and Aven.

According to NBU data, Alfa-Bank Ukraine was Ukraine's fifth largest bank (123.770 billion hryvni) by total assets as of March 1, 2022, out of the 69 banks that operate in Ukraine.

Alfa Group shareholders were initially represented on the Ukrainian financial market by the Alfa Capital investment company, but following the acquisition of Kyivinvestbank in late 2000, a decision was made to merge the businesses of the bank and of the investment company and to rename the bank as Alfa-Bank.