16 Jun 2022 16:12

Russian Central Bank intends to sell Otkritie at market value, terms of deal with VTB under discussion

ST. PETERSBURG. June 16 (Interfax) - The Central Bank of Russia (CBR) intends to sell Otkritie at market value, and the terms and conditions of the deal with VTB are under discussion, Central Bank Governor Elvira Nabiullina said at the St. Petersburg International Economic Forum (SPIEF) 2022.

Following sanctions being imposed against Russia's largest banks, government authorities decided to join Otkritie with VTB. Crimea's largest bank, RNKB, will also enter the perimeter of VTB Group as a separate legal entity.

"There is currently a discussion on the option of selling the asset in favor of VTB," Nabiullina said.

The Central Bank assumed ownership of Otkritie in 2017, restoring it to a healthy state as per a new scheme with the involvement of the specially created Banking Sector Consolidation Fund (BSCF). Otkritie received 456 billion rubles in capital from the CBR, which had expected to recoup a part of the funds by selling the bank's shares to the market and via judicial work.

"There should be a market valuation, so it is now difficult to talk about what part of the money will be returned. We are ready to sell at market value. It is clear that the situation may not be the best currently, and we had intended to sell on more favorable terms. However, the current circumstances dictate that it is worth selling now despite the situation not being very good, because it is not very correct for the Central Bank, which is simultaneously the regulator, to own one of the banks. All the more incomprehensible are the prospects of how it will develop in terms of prospects," Nabiullina added.

Nabiullina said that an appraiser was currently being selected to assess the assets of Otkritie.

"All conditions of the deal will continue to be discussed," Nabiullina said.

Otkritie will close 2022 with slight losses but its capital reserve will allow it to absorb those losses, the bank's head, Mikhail Zadornov, told reporters.

"The bank will nevertheless post a loss for the year. I think that in comparison with the market situation, it will be relatively small," he said.

"I can confidently say that we'll absorb the loss quite calmly, continuing to increase lending," he said.

The bank had profit of 5 billion rubles and capital of 500 billion rubles audited to Russian Accounting Standards for January-May 2022.

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