Exec says VTB Bank not to buy Otkritie FC Bank from cbank

MOSCOW, Sep 30 (PRIME) -- Russia’s second largest bank VTB will not buy Otkritie Financial Corporation (FC) Bank or its parts, like insurer Rosgosstrakh, from the central bank, member of VTB Bank’s management board Dmitry Pyanov told reporters on Thursday.

“It is most likely that VTB Group will not be the buyer of Otkritie Bank or of its separate components. That is why there has been no due diligence done regarding Otkritie group by employees of VTB Bank or its management, as far as I am aware,” he said.

First, the central bank has sent a clear signal to the market that a sale of Otkritie to a state-controlled bank was an unwelcome move. Second, Otkritie is a large asset, and its acquisition will create excessive burden on VTB Bank’s capital. VTB is not interested in Rosgosstrakh either as the bank has no plans to start its own insurance business again, the bank’s strategy focuses on partnership with insurer Sogaz, he said.

VTB plans buy two shares in Post Bank from the latter bank’s head Dmitry Rudenko for 6,000 rubles soon, thus acquiring control in the bank. A new shareholder agreement will be signed by VTB and Russian Post on Post Bank in October, he said.

In addition to that, VTB Bank would like to acquire the retail business of Citibank.

“At the end of August, VTB sent a non-binding legal offer to Citibank expressing its interest and forming a possible non-binding price for acquisition of the retail business of Russia’s Citibank,” he said, adding that VTB Bank was not the only one interested in the asset.

“As of today, we have received no official reaction to our suggestion,” he said, declining to disclose further details of the deal.

Pyanov also said that VTB will not suggest any more solutions to the Finance Ministry regarding a buyback of preferred shares of the bank. The previous offer of a 7-year plan for the bank gradually buying back all preferred shares from the Federal State Property Management Agency and the Deposit Insurance Agency for 521 billion rubles, which the ministry rejected, was optimal from the point of view of the burden on capital, he said.

“At the same time, we still see dividends on preferred shares as a measure that should help VTB bank pass some tough spots in the new additional regulations together with the Finance Ministry,” he said, stressing out that dividends on preferred shares don’t hurt interests of ordinary shareholders.

He also said that Russian banks are unable to prevent introduction of regulation of banking ecosystems by the central bank, but some easing may reduce the regulation’s burden on the capital of VTB to 200 billion rubles from 500 billion rubles.

The suggested easing includes a lower ratio on immobilization of fixed assets, expansion of penalty-free terms for retention of assets that are part of settlement of bad debts to seven years from three years, and calculations of risk-sensitive limits of the banking capital based on total capital instead of tier-1 capital. The regulator is to publish a new report on the matter in October, he said.

(72.7609 rubles – U.S. $1)

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