Bank of Moscow Annual Report is Not Ready

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.

History Repeating Itself…

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

“Potential harmful consequences of Bank of Moscow takeover”

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.

Thoughts on recent VTB statements regarding Bank of Moscow’s loan portfolio

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.

Bank of Moscow investments in non-core assets

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.