Independent directors and foreign investors will make up a majority of the board at MDM Bank, the lender’s president said Monday at a news conference announcing the terms of its merger with Ursa Bank.
At least five out of seven of the board members, including the board’s chairman, Oleg Vyugin, will be independent directors or international representatives, said Igor Kim, the bank’s new president and the former chairman of the board at Ursa.
Kim will control a 10.5 percent stake in the new entity, which became the country’s second-largest nonstate banker after completing its merger with MDM last week.
MDM deputy chairman Sergei Popov will have a 54 percent stake, while more than 6 percent will be owned by the Olivant investment company.
Owning a controlling stake was not “critical,” said Kim.
“Our shareholder support makes owning a controlling stake unnecessary,” he said.
Formerly Siberia’s largest bank, Ursa was the 20th-biggest bank in the country before the merger, while MDM was the 13th largest. The newly created entity will have 517 billion rubles ($16 billion), making it the second-largest privately owned lender after Alfa Bank. The lender plans to boost its loan portfolio by 20 to 25 percent this year and may sell a minority stake to financial investors as growth in bad loans slows down, said Vyugin.
“The right way now is to look at financial investors and only then to increase the free float. We do not rule out selling a minority stake to funds, depending on our need for fresh capital,” Vyugin told Reuters in an interview.
“But as of today, this need is not so big,” he said, adding that there are no talks going on with potential investors.
Loans to corporate clients now make up 60 percent of MDM’s total loan portfolio, but that is likely to change as the bank seeks to expand its position on the retail lending market, Vyugin said.
“The retail banking business is our priority, so we plan retail loans to increase to 60 percent of our loan portfolio,” Vyugin said.
The economy is struggling with its first contraction in a decade, and rising provisions against bad loans are eating into bank profits and capital.
“We can create additional provisions for more than 90 billion rubles. So, it is unlikely we will need fresh capital urgently. We are therefore not looking at the possibility of state support. … This source is the last on the agenda,” Vyugin said.
MDM sees strength in the retail banking business as the key factor to surviving the crisis.
“Now, everybody understands that retail deposits are the most solid source of funding, so the bank that is proactive in retail is able to find funding there,” Vyugin said.
(MT, Reuters)
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