Enjoying ad-free content?
Since July 1, 2024, we have disabled all ads to improve your reading experience.
This commitment costs us $10,000 a month. Your support can help us fill the gap.
Support us
Our journalism is banned in Russia. We need your help to keep providing you with the truth.

VTB Secures Foothold at Bank of Moscow

VTB moved a step closer to gaining outright control over Bank of Moscow on Tuesday after agreeing to pay $3.5 billion to buy out stakes held by the Moscow city government.

State-controlled VTB, Russia's No. 2 bank, bought the City of Moscow's 46.5 percent stake in Bank of Moscow as well as a 25 percent stake in insurer Stolichnaya Strakhovaya Grupa (SSG), which itself owns 17.3 percent.

The deal was concluded in time for VTB to vote its stake at a forthcoming shareholders meeting.

But it was not clear that VTB would exercise effective control over the bank, as managers who control around 40 percent of Bank of Moscow are holding out against a complete takeover.

"We can only talk about formal figures — 46.5 percent in Bank of Moscow and 25 percent plus one share in Stolichnaya Strakhovaya Gruppa (SSG)," said Andrei Sharonov, Moscow's deputy mayor.

Sharonov said VTB offered 103 billion rubles ($3.52 billion) for both stakes, more than its private rival Alfa Bank, which had called for the bank's disposal via an open tender rather than a closed sale to VTB.

"It is the biggest bid ... More than Alfa Bank has offered," he said, adding that Alfa Bank offered slightly less than 100 billion rubles. "We have heard about one other offer but it also was less than 100 billion rubles."

The deal comes a day after VTB, which has been circling Bank of Moscow since President Dmitry Medvedev fired then-Mayor Yury Luzhkov last year, took a third of seats on the lender's board of directors.

State-controlled VTB is seeking to buy the whole of Bank of Moscow, having already won cartel office approval for the deal.

But Andrei Borodin, chief executive of Bank of Moscow and also a major shareholder, said Monday he was not in talks with VTB over the sale of his stake, Russia's news agencies reported.

Analysts expect top Bank of Moscow managers to try to maximize the price of their stakes and get more than VTB offered to City Hall.

"I think the price is low and gives guidance to Borodin, as VTB could not offer a lower price. Probably, we will see management attempt to increase the price," said Leonid Slipchenko, an analyst with Uralsib.

Borodin, who along with another top manager, Lev Alaluyev, controls 20.3 percent of the lender, on Monday valued the bank at $8.2 billion to $9.6 billion, for a ratio of between 2 and 2.4 times its capital.

On Tuesday, Bank of Moscow said its board suggested rescheduling its annual shareholders meeting — during which shareholders will vote for CEO — to April 11.

Tuesday was the last day to become a shareholder in Bank of Moscow with rights to vote at the shareholders meeting.

… we have a small favor to ask. As you may have heard, The Moscow Times, an independent news source for over 30 years, has been unjustly branded as a "foreign agent" by the Russian government. This blatant attempt to silence our voice is a direct assault on the integrity of journalism and the values we hold dear.

We, the journalists of The Moscow Times, refuse to be silenced. Our commitment to providing accurate and unbiased reporting on Russia remains unshaken. But we need your help to continue our critical mission.

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 you can be confident that you're making a significant impact every month by supporting open, independent journalism. Thank you.

paiment methods
Not ready to support today?
Remind me later.

Read more