MOSCOW – Russia’s No. 2 lender VTB has received preliminary applications of 120 billion roubles ($1.70 billion) for a planned secondary public offering (SPO), CEO Andrei Kostin said on Tuesday, the second stage of a capital injection that should ease the bank’s financial woes.
VTB‘s shareholders last month approved an additional 302-billion-rouble share issue, which the Russian state will pay for in two non-cash assets including shares in Russian National Commercial Bank (RNKB).
Western sanctions imposed against Russia over its actions in Ukraine were responsible for VTB posting a loss in 2022, Kostin said, as they curtailed his bank’s access to international markets and forced it to buy FX at unfavourable times amid a run on deposits.
“The second additional issue that we have planned in the second quarter is entirely commercial,” Kostin said in an interview with state television channel Rossiya 24.
“We will issue shares on the open market, we have preliminary applications of around 120 billion roubles ($1.69 billion),” he said. “This is how we intend to get at least 270 billion roubles or more into the bank’s Tier 1 capital in the first half of the year and resolve the capital problem in this way.”
One step to resolving those capital issues was VTB‘s purchase of Otkritie Bank for 340 billion roubles late last year. The central bank bailed out Otkritie in 2017 and had been looking to sell the asset since cleaning up the toxic assets on its balance sheet in 2021.
Kostin also credited the central bank with abolishing some capital charges for systemically important banks.
The share acquisition involving RNKB will top up the Russian state’s stake in VTB by 48 billion roubles. RNKB is one of the largest lenders in Crimea, the Black Sea peninsula Moscow annexed from Kyiv in 2014. Ukraine has demanded Russia hand back Crimea.
Another part of the first share issue involves swapping a 30-year subordinated loan worth 100 billion roubles with the government for VTB shares.
($1 = 70.6950 roubles)