Page 68 - RusRPTMay19

the list.
The capital metrics of Oriental Express Bank (OEB aka Vostochniy) have sharply deteriorated, posting the worst capital adequacy ratios in all of Russia's banking system and dropping to be the second less profitable bank, Kommersant daily reported on April 30 citing the data of the Central Bank of Russia (CBR) for March 2019. OEB is central to the controversy around Russia’s most famous fund manager Michael Calvey and several of his colleagues were arrested after the Federal Security Service (FSB) opened an investigation into an accusation that their Baring Vostok fund illegally mispriced shares in the bank. Calvey is accused of RUB2.5bn ($37.5mn) embezzlement. As the OEB was complying with the CBR's directives on forming additional reserves, the bank was in parallel shedding reserves on other loans, while selling liquid securities at the same time, according to Kommersant. The bank posted a net loss of RUB7.2bn in March, after the profit of RUB0.57bn made in January-February, thus making a loss of RUB6.5bn for the first quarter overall. The capital of the bank was cut from RUB38.8bn to RUB28bn, with the capital adequacy ratio at 8.5% coming close to the minimum required of 8%. The analysts surveyed by Kommersant estimated that the OEB needs at least RUB5bn of immediate capital injection in order to continue to comply with regulatory requirements. In the meantime the additional share issue for RUB5bn by the bank was blocked earlier this year. The situation is likely to put more pressure on Baring Vostok defendants in the ongoing case.
Moscow Exchange announced that its current CEO, Alexander Afanasiev, is to step down one year ahead of his contract term on April 16, in line with the delivery of the current five-year strategy. Over the last seven years under Afanasiev’s guidance, Moscow Exchange has successfully realised a number of strategic infrastructure upgrades, including T+2 settlements, Euroclearability of the local market, and the launch of CSD, CCP and UCP. The BoD has proposed appointing the 10-year MOEX BoD veteran Yury Denisov to the CEO position, subject to regulatory approval. The company’s new five-year strategy, in the development of which the new CEO took an integral part, is to be presented in early July. We expect a neutral stock price reaction, as there is clear management continuity. We see the next catalyst being the strategy announcement in July, with operating efficiency and capital allocation in focus. VTBC reiterates its 12-month Target Price of RUB 120 and Buy recommendation (40% ETR).
The loss of Russian development bank Vnesheconombank (VEB.RF) was cut 1.6-fold year-on-year in 2018 to RUB175.8bn ($2.68bn) versus RUB288mn loss in 2017, the bank said on March 29. VEB was on the brink of collapse in 2015-2016, overburdened by loans issued for Sochi Olympics construction and hit by sanctions. In 2018 the bank was entrusted to Igor Shuvalov, a ex-Deputy Prime Minister and trusted Kremlin bureaucrat, which revamped the bank into the main hub of state investment spending in the economy. VEB will play a key role in the RUB25.7 trillion ($390bn) investments planned for the 12 national projects and has been tasked to oversee the infrastructure spending to cut waste and corruption.
TCS Group of Oleg Tinkov operating Russia's only pure online bank Tinkoff Bank reported creating its own supercomputer Kolmogorov, named in the honour of great Russian mathematician, the group said on April 1. Kolmogorov is a conglomeration of data processing servers linked by high- bandwidth connection, forming a single system that simultaneously tackles one specific taks, unlike cloud systems that deal with multiple tasks with dispersed
68 RUSSIA Country Report May 2019 www.intellinews.com