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Open letter from Andrey Borodin to the chairman of VTB, Andrey Kostin

Commenting on his letter to Mr Kostin, the chairman of VTB, Andrey Borodin said:

The decision to write this letter was motivated by my responsibility towards Bank of Moscow, which I headed for 15 years, and my former clients. Until recently, a group of Russian and international investors was in talks with VTB about a handover of the assets, which were acquired with loans, issued by Bank of Moscow, to the state-owned bank. According to an independent valuation, the total value of these assets is 266 billion RUB, while the total value of liabilities is 217 billion RUB.

However, suddenly VTB interrupted the regular negotiations process. This may lead to a destruction of the companies, which were financed by Bank of Moscow, because a forced writing-off of earnings instead of a regular debt servicing can paralyse the work of any company. For Russia this will mean the loss of jobs and an increase in social tensions in the areas where these companies operate.

The only alternative solution, which would allow VTB to plug an artificially created hole of 217 billion RUB in the balance sheet, is to ask for state aid. As a result, the state will be obliged to pay for VTB’s short-sighted policy and instead of reaching an agreement with the owners of the assets, VTB is going to burden the state with resolving its social and financial problems.

I cannot watch VTB put the future of these companies at risk and forcing the state to pay for its mistakes. I therefore call on VTB to continue negotiations.”

A copy of the letter is available here. The original document is in Russian.