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  • State-Owned Bank to Stock Up

    The St. Petersburg Times
    #1002, Friday, September 10, 2004

    State-Owned Bank to Stock Up
    By Sveta Skibinsky, STAFF WRITER

    Photo by Alexander Belenky / SPT

    An agreement on a two-step purchase deal was signed this week
    between the state-owned Vneshtorgbank and the St. Petersburg-based
    Promstroibank.

    According to an official announcement from Vneshtorgbank, or VTB, this
    week, the bank signed a memorandum which provides for its purchase
    of 25-percent stock share of Promstroibank, or PSB, by the end of
    September. VTB will then look into the possibility of purchasing
    another share package of 51 percent of PSB's shares, which would
    bring its holdings to 76 percent.

    The second part of the deal should be completed before the end of 2006,
    according to a statement from the VTB press office.

    VTB's senior vice-president Vasily Titov said the deal was broken up
    into two stages to allow for "additional research of PSB's financial
    position," business daily Vedomosti reported Tuesday.

    Titov said the banks will sign an agreement to define VTB's rights
    during the transitional period. He said that VTB will get a veto
    right in questions concerning PSB's major deals and key appointments.

    The value of the deal has not been disclosed, but price estimates have
    ranged from $250 million, from Moody's Interfax banking department,
    to $500 million, from Alfa bank senior economist Natalya Orlova,
    Vedomosti reported.

    VTB's official statement said that purchasing the controlling
    package in PSB "will allow the bank to strengthen its position in the
    Northwest, allowing further development of the VTB group to become
    a European-level bank chain."

    Business daily Delovoi Peterburg said that by allocating resources
    for the acquisition of private retail banks, the state is trying to
    create a second monopoly, similar to state-owned Sberbank.

    Meanwhile, VTB, which has its main offices in St. Petersburg on
    Bolshaya Morskaya ulitsa, has been looking for another location for
    its regional branch because it needs more space to accommodate its
    expanding activities.

    VTB is the largest bank in the country, with a base capital of about
    42.1 billion rubles or $1.4 billion. It has a wide chain of subsidiary
    branches, with five branches abroad - in Switzerland, Cyprus, Austria,
    Luxembourg and Armenia. VTB is also an associated bank in Germany
    and has representative offices in Italy, China, Ukraine and Belarus.
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