Russia has kicked off its biggest privatisation drive since the collapse of the Soviet Union with the sale of ten percent in the country’s second biggest bank VTB. It raised the equivalent of 2.4 billion euros.
The bank’s chief executive Andrei Kostin, as he met with Prime Minister Vladimir Putin, said the placing was twice oversubscribed.
Putin said: “According to financial experts, the privatisation was conducted well and was successful.” He called it a clear demonstration of investors’ confidence in the Russian financial system and its economic policies.
But critics said the Kremlin could have got much more if it had handled the sale better. The bank’s share price fell over 10 percent in two weeks from later January because the government changed its mind on how many to sell and finally went for a sale via the open market rather than directly to a consortium of investors.
However analysts said the success of the sale – the first step in Russia’s massive privatisation drive — boded well for coming public offering of shares. Sberbank, Russia’s biggest lender, will follow VTB later this year or in 2012.
Moscow needs to raise money through such share sales to help reduce its budget deficit.