Alfa Bank parent company asks to be included in list of economically significant organizations

MOSCOW. Dec 12 (Interfax) - The AB Holding Company, which controls Alfa Bank, has asked to be included in the government list of economically significant organizations (ESO), a source in the financial market told Interfax.

Inclusion in the list, in particular, allows the court to temporarily suspend, until the end of 2024, the corporate rights of a foreign holding company in relation to an ESO, for example, to vote at meetings, receive dividends, or dispose of securities and shares. In addition, the company's ESO status allows Russian beneficiaries who own it through a foreign holding company to receive securities and shares in direct ownership through the court, as well as switch to direct payments of dividends.

The compilation of the ESO list began in the Russian government after the entry into force of Federal Law 470-FZ in August 2023, but no companies have been included in it yet. Companies that meet a number of conditions (revenue, staff, status of systemically important credit institution), in which foreign structures from "unfriendly" jurisdictions (foreign holding companies) or owners from such countries own at least 50%, can qualify for ESO status.

Interfax has sent inquiries to both Alfa Bank and the Ministry of Economic Development.

Alfa Bank management considered various options for "moving" the ownership scheme. In early March, it became known that the founders of Alfa Group, Mikhail Fridman and Petr Aven, were planning to sell their shares in the bank to banking business partner Andrei Kosogov in order to achieve the lifting of Western sanctions. The credit institution was valued at 178 billion rubles, or $2.3 billion, the Financial Times reported, citing sources.

It was expected that Kosogov would buy Alfa Bank from the Cypriot ABH Financial Ltd. (one of the beneficiaries of which is himself, along with Friedman and Aven). The current ownership structure of Alfa Bank is unknown; at the time of the last disclosure of relevant information, the final link in the chain of ownership of the bank was AB Holding, owned by ABH Financial Ltd.

The purchase and sale agreement for 100% of the shares of the parent structure of Alfa Bank was concluded in February and is awaiting regulatory approvals from EU countries and Russia, as stated in the AB Holding report for 2022. The agreement contains a number of conditions, including obtaining permission from the Cyprus Ministry of Finance. Until this and all other conditions are met, the deal cannot be closed.

At the beginning of September this year, ABH Holdings S.A. said approval of the deal is still pending. The status of the application remains unclear due to the lack of an official response from the Cypriot Sanctions Enforcement Unit (MEK). "Despite ABH Financial's good faith attempts to engage with MEK, unfortunately, the transaction process has not progressed to date as we have not been provided with any solution or even clear instructions. In this regard, we have contacted not only the Cypriot regulator, but also leadership of the European Commission (EC) in August 2023, but we have still not received a response," the statement said.

As the company noted, an extremely contradictory situation has developed: on the one hand, the EU expects the group's European business to exit Russian assets, and on the other hand, EU regulators will not give the permission required for these transactions.

In mid-August, Fridman and Aven were included in the U.S. sanctions list. As stated in the statement from the U.S. Office of Foreign Assets Control (OFAC), the persons subject to restrictions carried out or continue to carry out activities in the financial sector of the Russian Federation, and are/were on the supervisory board of Alfa Group, one of the largest financial and investment conglomerates in Russia. The businessmen are already under sanctions from the EU, UK, Canada, Australia, and New Zealand.

According to Interfax sources, previously an application for inclusion in the ESO list was also sent to the Tinkoff group of companies (this was confirmed by the Ministry of Economic Development, which is collecting the applications for inclusion in the list).