Otkritie has sold its 19.8 per cent stake in Cypriot lender RCB as Russia’s largest privately held bank seeks to allay fears over its liquidity.
A company part-owned by RCB’s chief executive Kirill Zimarin paid Otkritie more than $100m to buy the stake, two people close to the deal said.
The deal, announced on Thursday, gives RCB’s management majority control over the Cypriot bank, which was formerly a subsidiary of Russian state-run lender VTB.
It comes at a time when Otkritie has suffered a significant depositor run that the bank’s management says is being fed by an “information attack” aimed at discrediting the bank.
Otkritie bought its stake from VTB in 2014 in a deal that allowed RCB to avoid western sanctions against its Russian parent. All three participants denied this was a reason for the transaction.
Otkritie said: “We always looked at our purchase of a minority stake in RCB as a portfolio investment, not a strategic one. Our expectations were completely justified — we received an attractive offer to buy out our share and are closing the investment with a significant profit.”
The people close to the deal said the bank made money even without taking into account RCB’s dividends, which were €41.5m last year, nearly double Otkritie’s net profit in 2016.
Before Otkritie bought in, RCB was involved in a series of transactions that critics say benefited Kremlin-connected figures, including cellist Sergei Roldugin, a close friend of president Vladimir Putin. VTB denies the allegations.
VTB also owns 10 per cent of Otkritie and helped fund much of its rapid expansion. Over the past five years, Otkritie grew by acquiring other lenders with state funds and performing one large repo deal for oil group Rosneft in late-2014 that saw it double its assets overnight.
Otkritie, which is considered “systemically important” by Russian bank watchdogs, has suffered a sharp fall in its liquidity in recent months: depositors withdrew Rbs611bn ($10.3bn), or 20 per cent of its total assets — in June and July.
Turnover in Otkritie shares shot up last week to Rbs16bn in transactions last Friday, before subsiding to an average of about Rbs4m for most of this week, according to data from the Moscow exchange.
State-linked institutions have intervened in several ways to help stabilise the bank.
Russia’s central bank gave Otkritie Rbs330bn in repo loans, according to Otkritie’s Russian accounting. Four bankers told the Financial Times that the central bank also gave Otkritie an emergency unsecured loan last week. Otkritie and the central bank declined to comment on the funding.
Otkritie also received a Rbs30bn loan from Trust Bank, a collapsed lender it has acquired as part of the central bank’s “financial rehabilitation programme”. Trust has previously made more than Rbs65bn in loans to Otkritie and one of its shareholders.
Last week, Russia’s anti-monopoly service approved Otkritie’s plans to increase its stake in struggling insurer Rosgosstrakh to 51.5 per cent.
The Russian anti-monopoly service on Thursday announced that Otkritie had applied to buy the Lukoil-Garant pension fund, which owns 7 per cent of Otkritie’s parent company and 8 per cent of Rosgosstrakh, from a former senior Otkritie executive. Otkritie’s senior management already make up most of the pension fund’s board and advisory council.
When an analyst from Alfa Capital released a note this week warning of financial trouble at Otkritie and three other large privately held lenders, Russia’s central bank and anti-monopoly service summoned him in for a meeting. Alfa Capital — a subsidiary of Otkritie’s biggest rival, Alfa-Bank — subsequently disowned the note.
“We are in constant contact with the regulator and appreciate its support during the artificially created turbulence in the banking market,” Otkritie managing director Anatoly Predtechensky told the FT on Tuesday.
Three people close to Otkritie told the FT that some of its senior managers had also moved personal funds out of the bank. A spokesman for the bank declined to comment.
Russia’s banking market has suffered jitters since the central bank moved to file criminal charges in July against the management of Yugra, Russia’s 15th-largest bank by retail deposits, over a $2bn hole in its balance sheet that regulators said was the result of a pyramid scheme. The central bank has shut down more than 300 lenders in the past four years.
The deposit run accelerated after Acra, a new Russian credit rating agency, unexpectedly gave Otkritie a junk rating in early July, which meant the bank could not hold deposits from the state as well as pension funds.
The reaction surprised Kirill Lukashuk, head of Acra’s bank ratings. “We didn’t see this one coming,” he said. Acra and Moody’s both placed Otkritie under review for a possible downgrade in the last week.
Earlier this year, VTB refused to let Acra publish its rating of the bank after a dispute over methodology. “They rate us even lower than the foreign rating agencies did, the ones whose politicised approach we complained about,” chief executive Andrei Kostin said in February.
Two executives close to Otkritie predicted the central bank would continue to support Otkritie as it downsized its assets to a manageable level. “They overextended,” one of the executives said. “They need to go through a rough patch.”
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