First Deputy Chairman of the Central Bank of Russia Aleksey Ulyukaev
Photo: Vasily Shaposhnikov
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Central Bank Begins Transferring Russian Banks Abroad to State
// Process
Kommersant has learned that Aleksey Ulyukaev, first deputy chairman of the Central Bank, and Andrey Kostin, president of Vneshtorgbank, will conduct negotiations in London on Thursday with British bank supervisory body the Financial Services Authority on the acquisition by Vneshtorgbank of 88.89 percent of the London Moscow Narodny Bank, which belongs to the Central Bank of Russia. In the next two weeks, similar talks will be held in France and Germany, after which the Central Bank will present the government, which owns 99.9 percent of Vneshtorgbank, with a plan to sell all Russian banks abroad to it.
At present, the Central Bank owns 88.89 percent of the stock in Moscow Narodny Bank, 87.03 percent in BCEN-Eurobank (Paris), 51.62 percent in Ost-West Handelsbank (Frankfurt-am-Main) and 15 percent in Donau Bank (Vienna). Vneshtorgbank owns 100 percent of Russische Kommerzial Bank AG (Switzerland) and Russian Commercial Bank (Cyprus), as well as 85 percent in Donau Bank and 30 percent in both East-West United Bank and Ost-West Handelsbank.
Kommersant has learned that Ulyukaev and Kostin will conduct negotiations in London on Thursday with the British Financial Services Authority, the government body responsible for the supervision of banks. A source close to the Central Bank says that they will discuss the acquisition of 88.89 percent of the stock in Moscow Narodny Bank by Vneshtorgbank.
This is essentially the first contact Vneshtorgbank has had with the Financial Services Authority as a future Moscow Narodny Bank stockholder. The decision was made at the end of last year to sell to Vneshtorgbank all the stock it holds in Russian banks abroad belonging to the Central Bank. In the final days of December, the National Banking Council declared it “expedient” to conduct negotiations with the banking supervisory bodies of the countries where Russian banks are located on conditions for the transfer of control over them from the Central Bank to Vneshtorgbank.
A Kommersant source at the Central Bank said that Thursday's meeting with British banking supervisors on Thursday is “mainly of a formal nature.” “Nothing sensational is likely to come out of it, much less specific plans for transferring the Central Bank's share in Moscow Narodny Bank to Vneshtorgbank.” It is surprising, therefore, that both the Central Bank and Vneshtorgbank refused to comment officially on their leaders' trip to London. At the Central Bank, it was only unofficially confirmed to Kommersant that “Mr. Ulyukaev is on a business trip abroad.”
The aura secret is probably going to remain around Kostin and Ulyukaev's meetings with supervisory bodies in France and Germany, which are planned for the next two weeks. Kostin has already publicly stated that “specific proposals and plans for the transfer of stock packages in Russian banks abroad to Vneshtorgbank” will be made following those meetings. Those plans will be presented to the National Banking Council and the government, which has the ultimate say in the fate of the Russian banks abroad.
It is possible that the December decision of the National Banking Council will be adjusted based on the outcome of the proposals made, at least as concerning the price of those stocks. The National Banking Council recommended that the Central Bank sell Vneshtorgbank the banks belonging to it for the value of their net assets. However, on Wednesday, several information agencies carried report referencing government sources who said that “the government is inclined to make the deals with Vneshtorgbank under market conditions.” Experts say that that may mean substantially lower selling prices for the Russian banks abroad.
Kommersant will follow the development of these events.
Elena Kiseleva
All the Article in Russian as of Feb. 10, 2005
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