The St. Petersburg Times
#1002, Friday, September 10, 2004

State-Owned Bank to Stock Up
By Sveta Skibinsky, STAFF WRITER

Photo by Alexander Belenky / SPT

An agreement on a two-step purchase deal was signed this week
between the state-owned Vneshtorgbank and the St. Petersburg-based
Promstroibank.

According to an official announcement from Vneshtorgbank, or VTB, this
week, the bank signed a memorandum which provides for its purchase
of 25-percent stock share of Promstroibank, or PSB, by the end of
September. VTB will then look into the possibility of purchasing
another share package of 51 percent of PSB’s shares, which would
bring its holdings to 76 percent.

The second part of the deal should be completed before the end of 2006,
according to a statement from the VTB press office.

VTB’s senior vice-president Vasily Titov said the deal was broken up
into two stages to allow for “additional research of PSB’s financial
position,” business daily Vedomosti reported Tuesday.

Titov said the banks will sign an agreement to define VTB’s rights
during the transitional period. He said that VTB will get a veto
right in questions concerning PSB’s major deals and key appointments.

The value of the deal has not been disclosed, but price estimates have
ranged from $250 million, from Moody’s Interfax banking department,
to $500 million, from Alfa bank senior economist Natalya Orlova,
Vedomosti reported.

VTB’s official statement said that purchasing the controlling
package in PSB “will allow the bank to strengthen its position in the
Northwest, allowing further development of the VTB group to become
a European-level bank chain.”

Business daily Delovoi Peterburg said that by allocating resources
for the acquisition of private retail banks, the state is trying to
create a second monopoly, similar to state-owned Sberbank.

Meanwhile, VTB, which has its main offices in St. Petersburg on
Bolshaya Morskaya ulitsa, has been looking for another location for
its regional branch because it needs more space to accommodate its
expanding activities.

VTB is the largest bank in the country, with a base capital of about
42.1 billion rubles or $1.4 billion. It has a wide chain of subsidiary
branches, with five branches abroad – in Switzerland, Cyprus, Austria,
Luxembourg and Armenia. VTB is also an associated bank in Germany
and has representative offices in Italy, China, Ukraine and Belarus.