Vneshtorgbank to be Privatized in Stages
Kommersant has obtained documents relating to the session of the government planned for Thursday, at which the privatization of Russia's second-largest bank, Vneshtorgbank (VTB), will be discussed. According to the documents, which were prepared by the Ministry of Economic Development and Trade, the Ministry of Finance, and the Bank of Russia, by 2010 the government will have gradually decreased its share in VTB's capital to 50% plus one share. It is also being proposed that access for minority shareholders to information about the bank's activities be "strictly regulated by rules set down by the bank." Experts polled by Kommersant believe that this stipulation will not seriously impact VTB's attractiveness to investment.
The documents for tomorrow's government meeting were prepared by Economic Development and Trade Minister German Gref, Finance Minister Alexei Kudrin, Central Bank (CB) Chairman Sergey Ignatiev, CB Deputy Chairman Alexei Ulyukaev, and Russian Federal Financial Markets Service (FSFR) head Oleg Vyugin. According to the documents, the government's "divestment" from VTB is expected to take place in three stages. In the first stage (at the end of 2006), the government's share in VTB will shrink from 99.9% to 97.6% as a result of the bank's merger with St. Petersburg-based Industrial-Construction Bank (PSB SPb). The second stage is the bank's proposed IPO in May 2007, during which the government's share will decrease further, to 75% plus one share. The volume of the IPO will constitute 22-23% of VTB's authorized capital, of which "up to 50% of shares" will be distributed within Russia, while the remainder will go on the international financial market. Vneshtorgbank is hoping that its IPO will attract 90-120 billion rubles in investments. The third stage, which is slated for 2010, will include further increases in VTB's capital financed by additional stock issuances totaling 210-250 billion rubles, which will bring the government's share down to 50% plus one share.
The plan also describes how the government will retain operational control over the bank's activities in the long term. Thanks to the proposed scheme, the shares in the packet sold by the bank "will be dispersed among tens of thousands of small Russian and foreign investors, which in practice will exclude the possibility that a consolidated group of minority shareholders will be able to participate in the management of the bank."
The plan notes that, in accordance with the law "Concerning Shareholders' Societies," shareholders whose aggregate holdings are less than 25% of voting shares "will be deprived of access to the minutes of meetings of VTB's leadership, as well as to the bank's account books." According to the document, "the furnishing of information about VTB's activities will be strictly regulated by rules set down by the bank."
The government has its reasons for not letting minority shareholders have a say in the operational management of Russia's second-largest bank. Vneshtorgbank's fairly recent transformation into a giant bank has been fuelled by weapons and nuclear contracts, a large part of which are classified. The bank holds the joint Russian-American export contract HEU-LEU, which refines weapons-grade plutonium into fuel for nuclear reactors (in the 1990s, the contract was held by Konversbank and MDM Bank), as well as contracts belonging to Rosoboronexport, including contracts for the delivery of jets to Malaysia and submarines to China. Vneshtorgbank has also gained a virtual monopoly on providing banking services to the federal authorities: many federal services and agencies created during the reform of the machinery of state have accounts there. The balances on current and budgetary accounts opened with the bank by government agencies total approximately $150 million.
The majority of experts questioned by Kommersant believe that the regime of secrecy will not seriously impact VTB's attractiveness to investment. "The bank makes its full accounts available according to international standards. Even in comparison to Sberbank, which is nominally not government-owned, VTB sometimes looks better from the standpoint of disclosing information. I think that investors would have cause to fear if there were a large volume of risky credit. If the bank is profitable, there won't be any problems," said Natalia Orlova, a senior economist at Alfa Bank.
Valery Petrov, the chief managing director at Alfa Capital, believes that the problem of VTB's closed nature can be resolved by the institution of a board of independent directors. "In the West, it is accepted that an independent director who represents the interests of minority shareholders during boardroom decision-making is not obligated to divulge all the information he knows," said Mr. Petrov. "Usually this works for everyone, and it would be logical for VTB to designate such a director, especially since that is one of the conditions for a bank's standing to be raising by international ranking agencies."
Two presidential decrees are expected to come out of the government's meeting on Thursday: "Concerning the Foreign Trade Bank" (which will permit additional issuing of shares) and ordering the removal of VTB from the list of national strategic enterprises. The majority of officials asked by Kommersant believe that there will be no problems getting the plan for the privatization of VTB approved by the government. "The document was vetted by all of the interested parties – the Ministry of Economic Development and Trade, the Ministry of Finance, the Central Bank, and the FSFR – at the highest levels," explained a government source. He added that concrete parameters for VTB's IPO will be set at the next stage by the bank's oversight council before being confirmed at a special shareholders' meeting.
Elena Kiseleva and Igor Moiseev
All the Article in Russian as of Dec. 20, 2006
|
