VTB’s Kostin Says Russia Is Seriously Considering Stake Sale

VTB‘s Kostin Says Bank Stake Sale ‘Up to Government’
  • Sale currently `difficult' given depressed share price
  • Bank may consider sale to Middle East, Asian investors

VTB Group, Russia’s second-largest bank, is waiting for government instructions on privatizing a stake as state officials are “quite serious” about a sale this year, according to Chief Executive Officer Andrey Kostin.

“At the moment we’re at the initial stage -- I haven’t received any instructions to start to prepare the ground for this,” Kostin said Wednesday in a Bloomberg Television interview at the World Economic Forum in Davos, Switzerland. “The situation is quite difficult because the price is very low.”

Andrey Kostin in Davos
Andrey Kostin in Davos
Photographer: Simon Dawson/Bloomberg

The government is making a new push to sell state assets to help cover a second year of budget deficits following the collapse in oil prices. Economy Minister Alexei Ulyukayev said last week that Russia should revisit the idea of selling stakes in the country’s two largest lenders, Sberbank PJSC and VTB, to boost the banking system’s overall capitalization.

The Russian government owns 61 percent of VTB and could sell up to 10 percent without changing the existing law, Kostin said. In 2013, Russia reduced its stake in the bank from 76 percent via a secondary public offering.

While VTB has not approached investors about the potential sale, it will target the Middle East and Asia, Kostin said, as sanctions from the U.S. and Europe make those markets unrealistic.

VTB will try to keep its dividend yield at around 3 percent in 2016, on par with last year’s level, Kostin said. The bank’s depository receipts fell 6 percent to $1.62 at 11:20 a.m. in London as oil traded near its lowest in 12 years.

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