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June 30, 2017 www.intellinews.com I Page 4
VTB, which is run by former Soviet diplomat An- drei Kostin, has been aggressively cutting costs and trying to diversify into new geographies to offset the blows in Europe and back home in Rus- sia. Beyond the hit of the EU and US sanctions, the London unit has suffered from severe conta- gion as well as a collapse in commodity prices.
VTB Capital said its cost management pro- gramme, which has been in place since 2014, was continuing and had led to operating expens- es falling by 12% during the year. Operating costs per employee were unchanged at $694,000.
Remuneration for directors and senior person- nel declined to $12.4mn during the year from $14.8mn. However, its highest paid director saw his package soar to $4.4mn from $2.8mn in 2015. VTB said it has a commercial lease for five floors at 14 Cornhill, located next to the iconic Bank of England building, with a lease term of 20 years until 2028. The bank, which has an option to first break the lease in 2024, said it has already sub- leased three floors in the London building.
The lender’s maximum credit exposure to any cli- ent was $394mn to Lloyd’s of London, which had helped VTB Capital to “de-risk some of its larger African sovereign exposures” via credit insurance contracts.
Two years ago, Kostin accused UK regulators of making excessive demands of the UK operation due to Russia’s conflict with Ukraine. bne Intel- liNews reported exclusively last year that Russian lender Gazprombank was also winding up its London operation after the UK regulator indicat- ed it wouldn’t grant authorisation without more information about its shareholder. The secretive lender, which is also now sanctioned, opened its office in London in 2006 with plans to pave the way for the group’s initial public offering.
VTB Capital was the leading investment bank in Russia in the first four months of 2017, earn-
ing $16mn or about a 23% share of the market. The business, which has been Russian President
Vladimir Putin’s investment banking champion since its inception in 2008, is facing increased competition from state-controlled rivals Sber- bank CIB and Gazprombank. Sberbank is third with a 10% share while Gazprombank has a 7% share, according to data provided by New York- based consultancy Freeman & Co.
In the filings, VTB highlighted “its privatisations deals for Bashneft and Rosneft” as well as work on advising lender Otkritie’s $1.4bn acquisition of one of the world’s biggest diamond deposits from oil producer Lukoil. Its bankers have also acted as bookruners on the Kremlin’s $3bn sover-
eign bonddeal in June and in 2016.
Outside of Russia, VTB noted its mandate advis- ing Indian conglomerate Essar on their $13bn sale of Essar Oil to Kremlin-controlled energy behemoth Rosneft and its partners.
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