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VTB Expects to Complete 10% Stake Sale by Mid-2011

Oct. 1 (Bloomberg) -- VTB Group, Russia’s second-biggest lender, “definitely” plans to conclude the sale of a 10 percent government stake by mid-2011, Chief Executive Officer Andrei Kostin said.

A “group of investors” is seeking to buy the stake, Kostin told reporters today in Yalta, Ukraine. Selling the entire stake to TPG Capital, as some media outlets have reported, is “out of question,” he said.

The government boosted its stake in VTB to 85.5 percent from 77.5 percent in September 2009 by acquiring shares for 180 billion rubles ($5.9 billion) as part of a program to stabilize the financial industry. Finance Minister Alexei Kudrin said Sept. 8 that the state may sell part of its holding as early as this year. The government targets a premium of as much as 67 percent on the purchase price, according to Kudrin.

TPG, a global private-equity investor, is in talks to acquire a 10 percent stake in the lender, the Moscow-based newspaper Kommersant reported last month.

Russia may raise 890.5 billion rubles from asset sales in 2010-2013 to help finance the budget deficit, including 298 billion rubles in 2011, according to the Finance Ministry. The ministry has proposed selling stakes in companies including VTB, OAO Rosneft and OAO Sberbank.

State asset sales will cover 16 percent to 17 percent of the government’s budget deficit in the next three years, compared with 0.3 percent this year, Economy Minister Elvira Nabiullina said Sept. 23.

VTB’s privatization “makes sense” as long as the government retains control, Kudrin said in August.

To contact the reporter on this story: Paul Abelsky in Moscow at pabelsky@bloomberg.net.

To contact the editor responsible for this story: Willy Morris at wmorris@bloomberg.net.

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