It appears that the situation in Bank of Moscow continues to deteriorate. Today, the Russian media has reported that the Board of Directors of Bank of Moscow (appointed by VTB) was not able to sign off the 2010 annual report to be presented during the next shareholders meeting for their approval. The Bank was unable to agree its position with auditors on the financial reports, prepared in accordance with international standards. The Bank’s audit committee lost yet another member: chairman of the audit committee Konstantin Popov has resigned.
Can VTB manage this situation or is this further evidence that the sale of the Bank of Moscow shares to VTB was a commercial mistake? Today’s news may lead to a number of negative consequences, such as dissatisfied shareholders, loss of customers and investors and cause irreversible damage to the Bank’s reputation as a credible financial institution.
For the first time in the Bank’s history, its annual report is being prepared in such a way. The Bank’s last consolidated financial statements date back to November 2010.
You can read a recent news article on this issue here.
It appears that the ‘peacemakers’ from the Yusufov family once again are aiming to expand their wealth of assets. This time the head of the family – Igor Yusufov, a former energy minister, decided to acquire shares in the Domodedovo airport. Yusufov, who was close to Kremlin since the Boris Yeltsin times, served as Russia’s Energy Minister in 2001 during the Putin administration. Until recently, he was President’ Medvedev special envoy for energy cooperation and, apparently, remains close to Kremlin even after his resignation. Much has been said lately about Yusufov’s ‘peacemaking’ skills and his ability to help to resolve conflicts with extraction of benefit for himself. Continue reading
There is a great concern about the future of the companies, financed by Bank of Moscow before VTB’s takeover, as well as their employees after VTB has cut off financial services to these assets. Moskovskiy Mezhrespublikanskiy is one such company. It has recently been reported by the media that there is a risk that Moskovskiy Mezhrespublikanskiy Vinzavod may go bankrupt. Such situation has been caused by the interruption of financing to the company by Bank of Moscow new management, appointed by VTB. Future of the other assets that previously received loans from VTB is uncertain too because of the lack of financing.
The Moscow Post
Recent Article in the Moscow Post states that number one person on the list of “banned bankers” proposed recently by VTB head Andrey Kostin should be Mr. Kostin himself.
The article provides a number of reasons why he should be banned from banking. These reasons include: theft by the management of VTB during the provision of loan to buy Chinese drilling technology, constant theft of ‘bags of black money’ for the Ministers and Kremlin officials, fraudulent dealing in the ‘VTB-real estate’ company.
Besides the article provides an extract from the conversation where Kostin straightforwardly states that he is hiding the truth from the shareholders and regulators regarding the real financial state of VTB Group.
This article talks about two members of the Bank of Moscow new management team: the current president of the Bank of Moscow Michael Kuzovlev, who is referred to in the article as ‘the main raider of VTB,’ and his main ‘insider’ – the current vice president of the legal affairs Tatyana Udalcova. According to the article, they were planning dismissal of Andrey Borodin for a long time. Now that they have achieved this, according to the article, their main goal is to ‘demonstrate’ to everyone that the previous managers of Bank of Moscow left the bank in a very bad state. To do this, they are planning to employ rather unethical methods, such as ‘creating’ the apparently existing holes in the balance sheets of the Bank, ‘left by the previous management’. The article also states that these managers are planning to make previously successful businesses of the Bank bankrupt. By doing so, they plan to benefit financially without facing any consequences as they can easily put the blame on the previous management.
The current VTB management has recently made a number of statements regarding the state of Bank of Moscow and issues with its loan portfolio, claiming that they were only able to find out about the real situation in the Bank after they bought it. However, VTB management ignored the offer of the former President of Bank of Moscow, Andrey Borodin, made on 22 March 2011 to purchase their shares in the Bank, at the price at which they originally purchased those shares. Had they been dissatisfied with the state of the Bank, it is unclear why they ignored Mr Borodin’s offer.
Recently, there have been discussions in the media about Bank of Moscow investments in non-core assets under the former management. Indeed, Bank of Moscow has invested in and provided loans for a number of companies working in such industries as forestry, construction and agriculture. The Bank has always been open and transparent about these investments and the financing of various projects. The Bank always followed all the necessary procedures when approving loans to these companies. Financing by Bank of Moscow has helped a number of companies to grow and has created thousands of new workplaces in several regions of Russia. One such example is a company called Investlesprom, in which Bank of Moscow owns 20% of its shares. Investlesprom provides workplaces for almost the entire population of two Russian cities – Segezha in Karelia and Sokol in Vologod region. Under Andrey Borodin’s leadership, Bank of Moscow was preparing to invest in projects that would create some of the most modern production facilities in Russia. These projects supported the Russian Government’s strategic objective of modernising the country. Apparently, the new management of the Bank has frozen these projects. The reasons for this remain unclear.
Andrei Kostin’s Vedomosti interview…
Scalping was something ancient Scythians did!
Who knows if Mr. Kostin is capable of such a thing, but his macho ambitions seem very evident.
Would such a person be welcomed in the premiere banking league? In a couple of years Mr. Kostin may want to scalp a western banker…
Andrey Borodin today released documents showing that VTB management ignored the offer from the former President of Bank of Moscow, made on 22 March 2011, to purchase their shares in the Bank, at the price at which they originally purchased those shares…
You can read the documents here (Russian only).