The government has allocated 200 billion rubles ($5.52 billion) to buy shares in VTB to help the bank meet capital requirements in an environment of deteriorating loan portfolio quality and rising bad loan provisions.
The debate over the shape and amount of the government's support for the banking sector has become one of the reasons Russia still does not have a 2009 budget, with the main issue being the pricing of VTB's new share issue.
It is not yet clear how much the government is prepared to pay for VTB's shares. Tsekhomsky said the bank wanted to place new shares at a premium to the market.
"Our proposal is that it makes sense to talk about a premium, not discount, to the current market price," Tsekhomsky said, adding that he saw 2008 dividends as "not very significant."
Analysts were skeptical about the proposed valuation since it assumed the placement price at about three times the current market price of VTB shares, which have lost over 80 percent since the $8 billion public offering in 2007.
"This valuation is not realistic. But of course, the placement at premium to the market would be positive for VTB. As far as we understand, it is VTB's proposal, not the government's," said Natalya Pushkina from UBS.
UBS estimates that VTB's book value is about $4 per GDR as of end-2008 in comparison the market price of $1.16. A government source said VTB's proposal was "optimistic."
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.