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. Last Updated: 07/27/2016

NIKoil Denies Buying Ural-Siberian

NIKoil Financial Corp., which owns one of the nation's largest investment houses, denied a report Tuesday saying it had bought a controlling stake in Ural-Siberian Bank.

Business daily Vedomosti led its Tuesday edition with a story citing three unidentified sources close to the companies as saying that NIKoil had bought the stake earlier this month in a deal valued at between $250 million and $300 million, which would be the largest ever in the Russian banking industry.

But NIKoil issued a statement late Tuesday denying the story, adding that "it is unfortunate that such an authoritative business publication has printed this misleading material."

Uralsib declined to comment.

NIKoil's denial, however, did not dissuade banking analysts.

"It would make a lot of sense," Dmitry Vinogradov of Brunswick UBS said. "NIKoil has a lot of ambition for commercial banking, and Uralsib has a wide retail network. It fits."

Rumors that Uralsib has been negotiating the sale of a controlling stake to either NIKoil or HSBC, a British bank, first surfaced this summer. And both the World Bank's private sector lending arm, the International Financial Corp., and the European Bank for Reconstruction and Development had reportedly been interested in a minority stake in Uralsib.

Late last month, Vedomosti reported, again citing an anonymous source, that NIKoil was in talks with Uralsib president Azam Kurmanayev, who is also thought to be a major shareholder, about buying 57 percent of the bank.

Neither side ever confirmed that negotiations were going on.

If a deal is struck, however, it may give a big boost to sector-wide consolidation, analysts said.

"Until now, large Russian banks have been focusing on buying up regional players," Andrei Ivanov of Troika Dialog said in a research note Tuesday.

"The acquisition of a leading nationwide bank ... is something new," Ivanov said.

Alfa Bank, meanwhile, suggested that the sale of Uralsib ahead of December's presidential election in Bashkortostan would suggest an increasing level of political uncertainty in the republic.

"This is therefore negative news for all companies in Bashkortostan controlled by the republic's current government," the bank said in a morning brief.

The government of Bashkortostan, the largest Uralsib shareholder with 37.5 percent, has said it plans to sell 15 percent of that stake on Oct. 29.

Uralsib is one of the nation's largest banks, with $2.1 billion in assets and $340 million in private deposits as of July 1, according to Interfax's Center for Economic Analysis.