Page 71 - RusRPTNov18

8.1.7 Bank news
VTB announced an agreement to acquire an 81% stake in Sarovbusinessbank (Nizhny Novgorod Region). The parties plan to close the deal until the end of 2018, after receiving the approval of the departments. In the future, VTB intends to consolidate 100% of the bank’s shares, having repurchased shares of minority shareholders on the offer, and to join the bank in 2020, after which it will completely go under the VTB brand. At the same time, at least before integration, VTB promised to keep the bank’s team, reinforcing it with personnel from the group. The parties do not disclose the price of the transaction.
Russian state development bank Vnesheconombank (VEB) will be granted RUB600bn ($9.1bn) of budget subsidies through 2024 to fully cover external debt, while getting another RUB300bn for recapitalisation and possibly another RUB350bn for issuing discounted development loans, the Prime Minister Dmitri Medvedev announced at the meeting of the bank's supervisory board. The bank is also being rebranded VEB.RU. VEB was on the brink of default in 2015-2016, overburdened by loans issued for Sochi Olympics construction and hit by sanctions, has been slated by Kremlin to become one of the main hubs of infrastructure spending after an appointment of Igor Shuvalov, ex-Deputy Prime Minister and trusted Kremlin bureaucrat. A large part of president Vladimir Putin plan to revive Russia’s flagging economy is to invest heavily into infrastructure and VEB has been tasked as the government organ to oversee the task and enforce some discipline and accountability in the process. The makeover of VEB into the main vehicle of state-investment drive was sealed by rebranding it into National Development Institute VEB.RF, also announced by Medvedev on October 30. "This is not only the change of the name, this is, first and foremost, in my mind, the reflection of the role that is being reserved for VEB," Medvedev commented, noting that VEB will not only finance, but also accompany the investment projects.
Russia's electronic payment system Qiwi has announced the launch of a multi-banking platform based on its instalment card Sovest and signed a partnership agreement with Tatarstan-based AK Bars Bank, one of Russia's top 20 banks. Qiwi previously posted strong second-quarter results , but the margins continued to be pressured by new projects Sovest, Tochka and Rocketbank. According to Qiwi, Sovest is to start issuing AK Bars cards in October, with the bank granting a loan portfolio of RUB 3.5bn for the first year of the partnership. The Sovest concept is a card that allows customers to buy big ticket items like televisions that they pay off in instalments rather than with a single payment drawn on an account. As such the Sovest card can replace the point-of-sale unsecured consumer loans activity of banks that have been the traditional way of offering consumers credit in stores until now. Under the multi-banking model, Sovest will be a technological partner and platform operator, responsible for client acquisition, card distribution, and brand development and marketing. Partner banks will be responsible for loan origination, client scoring and collection. VTB sees the development as further strengthening the bank's call for a re-rating of Qiwi on the back of the strong turnaround in its EPS that we anticipate next year, while reiterating a Buy call on Qiwi with 12-month target price of $25 implying an estimated total return (ETR) of 108%. BCS Global Markets does not believe that the partnership in itself will sufficiently boost Qiwi's financials, but welcomes the development.
71 RUSSIA Country Report November 2018 www.intellinews.com