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. Last Updated: 07/27/2016

Vneshtorgbank Buys Central Bank Foreign Units

Russian central bank-controlled Vneshtorgbank (VTB) has received permission from foreign authorities to buy out two of the five central bank's subsidiaries abroad, VTB head said Wednesday.

VTB Chairman and President Yuri Ponomaryov said the bank received permission from Luxemburg authorities to buy 100 percent of the East-West United Bank, 49 percent of which belonged to the central bank.

"We have already bought 49 percent (of East-West United Bank). We will buy the remaining 51 percent at the beginning of this year," Ponomaryov told a news conference.

He said Austrian authorities allowed VTB to buy 49 percent of the local Donau-bank in addition to 51 percent it had already acquired. Russia's cental bank owned 49 percent of Donau-bank at the beginning of 1999.

Ponomaryov did not give details of the deals aimed at buying out central bank's foreign subsidiaries.

The buy-outs could nominally safisfy International Monetary Fund demands that the central bank divest its subsidiaries abroad. But the deals would leave the assets under indirect control of the central bank, which owns 99.9 percent in VTB.

Ponomaryov also said VTB was on track to buy 31 percent of Ost-West Handelsbank, located in Germany, as it expected German officials' permission by Mar. 7.

He said British and French authorities were considering VTB's bids to buy a stake in London-based Moscow Narodny Bank and a 38 percent stake in Paris-based Eurobank.

At the beginning of 1999, Russia's central bank owned 88.9 percent of Moscow Narodny Bank, 77.8 percent of Eurobank and 82 percent of Ost-West Handelsbank in Frankfurt-on-Main, 49 percent of Donau-bank Vienna and 49 percent of East-West United Bank.

Ponomaryov said VTB might buy a stake in Eurobank's Moscow subsidiary Eurofinance bank in addition to a 15 percent stake in Eurofinance which VTB already owned.

"Such is the request of French authorities -- Eurobank should cease to be Eurofinance's shareholder," he said.

VTB's net profit to Russian accounting standards doubled to 1.3 billion roubles ($46 million) in 2000 from 0.6 billion roubles in 1999, the bank said in a statement.