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. Last Updated: 07/27/2016

Vneshtorgbank Eyes MOST




State-owned Vneshtorgbank has moved a step closer to seizing hold of MOST Bank, which in the past formed the core of oligarch Vladimir Gusinsky's Media-MOST group, which includes television station NTV, newspaper Segodnya and radio station Ekho Moskvy.


"The supervisory board met today to discuss terms of acquisition," Natalya Nikiforova, spokeswoman for Vneshtorgbank, said Wednesday.


With its eyes on MOST Bank's regional network, Vneshtorgbank agreed this month to guarantee its prey's liabilities to private clients.


"MOST Bank had one of the best payment-processing systems in the country," Andrei Naumenko, analyst with Thomson BankWatch, said from Cyprus in a telephone interview.


But while acquisition of the regional offices would undoubtedly create synergy effects for Vneshtorgbank, it could also get caught up in bickering with MOST Bank's shareholders, who may saddle Vneshtorgbank with debts to Media-MOST, analysts said.


MOST Bank got into trouble after the financial crisis of 1998, which wiped almost all oligarch banks from the market. It kept its head above water for some time, getting financial resources from the Moscow city government, which used to park interest-free budget funds on the bank's accounts, but when City Hall transferred its money to the Bank of Moscow earlier this year, MOST Bank went under.


Having in October 1998 issued a stabilization loan in return for 76 percent of MOST Bank's shares taken as collateral, the Central Bank kept it on a short leash, so now Central Bank head Viktor Gerashchenko, who also heads Vneshtorgbank's supervisory board, appears to be in full control.


"Only the terms of acquisition are up for discussion," said an official at Vneshtorgbank who asked not to be identified. "That the acquisition will proceed is a foregone conclusion."


Media-MOST spokesman Dmitry Ostalsky said he suspected the bank's guarantees on loans to the media holding could be discussed with Vneshtorgbank.


On May 17, the Central Bank installed a temporary administration at MOST Bank until July 1.


Though extending a temporary managers' mandate is quite common, Gerashchenko is likely to issue his verdict to MOST Bank before July, insiders said.


However, it is likely the new owners will run into trouble if MOST Bank's former clients later produce claims, asking for repayment of their frozen accounts.


"It is clear that the bank's loan portfolio is of low quality," said an analyst with Rating center who asked not to be identified. "And I would not be surprised if some contingent liabilities arise after the acquisition."


In private, officials at Media-MOST say that the bank fell victim to a political campaign against the holding, while the Central Bank's managers are well aware it may have to cover some of MOST Bank's commitments.


"Almost all temporary managers here are crooks," Gerashchenko said in a Vedomosti interview last week, without mentioning any particular bank.


Should Vneshtorgbank swallow MOST Bank's branches in the regions, it will strengthen its retail operations.


"This would fall in line with Vneshtorgbank's policy of regional expansion," Thomson BankWatch's Naumenko said.


Vneshtorgbank has regional subsidiaries in Nizhny Novgorod, Novosibirsk, Ulyanovsk and Chita as well as a number of branches across the country.


Vneshtorgbank's predecessor - Vneshekonombank - was involved in retail banking, but bailed out after the banking system collapsed during the nation's first sovereign default in 1991.