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Morgan Stanley Accommodates in Russia
U.S. Morgan Stanley bought out Russia’s City Mortgage Bank through the deal with the budget five fold above the funds of the latter, the sources say, predicting that arrival of the American player will drive down mortgage lending rates.
Morgan Stanley announced it bought out 100 percent in City Mortgage Bank (Gorodskoy Ipotechny Bank, GIP), attributing the purchase to its strategy to create global business on the mortgage market.
City Mortgage Bank emerged October 2003 on assets of Gerd Bank after its buyout by Russia’s state insurer, Rosgosstrakh. Former top managers of DeltaCredit bank, who moved to City Mortgage Bank, became its holders in addition to Daniil Khachaturov, president and owner of Rosgosstrakh.
At close of the third quarter, City Mortgage Bank had roughly $1 billion in funds, and the mortgage deals amounted to more than $300 million.
Morgan Stanley is the capital company of the United States with 600 affiliates in 30 states of the world. It launched the business in Russia in 1994, but was licensed to render bank, broker and dealer services here only in 2005.
Even though the parties haven’t disclosed the deal terms, the sources say Morgan Stanley paid around $200 million, signaling the deal value-to-bank’s funds ratio was the record five.
According to analysts, the deal will provide Russia’s player with the excess to cheaper funding of its operations. It will fuel competition in Russia and pressurize mortgage rates. The rates may approach 9 percent for dollar credits already next year, some analysts forecast. But others caution that the state banks, Sberbank and VTB, determine the mortgage rates in the country, so the decline will hardly happen earlier than their IPOs.
www.kommersant.com
All the Article in Russian as of Dec. 22, 2006
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