Bill to allow CBR to sell Otkritie Bank to VTB without auction and preliminary regulatory approval
MOSCOW. June 27 (Interfax) - Proposed amendments to a bill submitted to the State Duma would allow Otkritie Bank to be sold to state lender VTB without preliminary approval from the Central Bank of Russia (CBR) and Federal Antimonopoly Service (FAS) and without the announcement of an auction.
The amendments to the government bill (No. 131315-8) regulating the issue of various types of shares by international companies, were submitted by a group of lawmakers. The document has been approved by the Duma Property Committee and is scheduled to be considered in the second reading on June 28.
The changes would allow the CBR's board of directors to make a decision to sell shares in Otkritie Bank that were acquired as part of measures to prevent Otkritie's bankruptcy to VTB at a market price to be determined according to the appraisal process established by Russian law.
The CBR board decision will not be subject to the rules for the sale of shares in banks acquired as part of efforts to prevent bankruptcy and provisions of laws that require obtaining preliminary or subsequent approval from the CBR and the FAS.
The current procedure for CBR to divest its stakes in bailed-out banks requires, basically, that it sell the shares at auction (this was the case with the sale of Asia-Pacific Bank, while other banks bailed out by the CBR came out of the financial recovery process in a non-market way). If there is only one bidder or one bidder left, the CBR can sell the shares through a non-competitive process. Last year, a new provision was added to these rules that allows the CBR to sell banks through a mergers and acquisitions mechanism.
The CBR acquired Otkritie FC Bank in 2017 after bailing it out using a new process involving the specially created Banking Sector Consolidation Fund. The bank received a capital injection of 456 billion rubles from the CBR, which hoped to recover some of this money by selling Otkritie's shares and through the courts.
After the imposition of sanctions against Russia's largest banks, the authorities decided to merge Otkritie into VTB. Crimea's largest bank RNCB will also enter VTB Group's orbit as a separate legal entity.
The CBR intends to sell Otkritie at a market valuation, and options for the sale are now being discussed, Central Bank chief Elvira Nabiullina said on the sidelines of the St. Petersburg International Economic Forum earlier this month.
"The deal could include securities, but not necessarily from the balance sheet of BM Bank [formerly Bank of Moscow]. We have an OFZ [federal bond] portfolio of 750 billion rubles and another 100 billion rubles on the balance sheet of BM Bank. Which of them might be involved in the deal makes no difference on the whole, they are not particularly 'colored,' so they can include these assets, this was allowed. But we're starting with the appraisal now. Once the appraisal is done the amount will be clear," VTB head Andrei Kostin told Interfax on the sidelines of the forum.
Otkritie's appraisal for its merger into VTB will take two to three months, so the deal will not be closed before the fall, Kostin said.