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. Last Updated: 07/27/2016

Gazprombank Looking to Go Public

VedomostiGoing public is the third phase in the bank's strategic plan, which includes a $1.3 billion capital boost from Gazprom.
Gazprombank, the banking minion of Russia's gas giant, will look to go public as early as the second half of 2007, according to Gazprom's in-house corporate magazine.

The news from Russia's third-largest bank followed similar announcements this week about share sales at Gazprombank's larger state-sponsored brethren. Sberbank, the Soviet Union's former savings bank, told analysts Monday it would sell up to 4.75 million additional shares worth billions of dollars. Venshtorgbank, the Soviet bank for foreign trade, clarified its IPO plans for next year.

Then, Gazprom published an interview with a Gazprombank executive saying that some of the bank's shares could be in public hands as early as 2007, Interfax reported Thursday.

"We have the right to choose the timing of the IPO based on market conditions," Alexander Sobol, deputy chairman of the bank, told the Gazprom magazine.

A Gazprombank spokesman said Thursday that preparations for an IPO of "not less than 10 percent" of the company could take two or three years. Going public is the third step in a strategic plan that includes a $1.3 billion capital increase from Gazprom in coming months and the conversion of the bank from a closed joint-stock company to an open joint-stock company, he said.

The latest edition of Gazprom magazine was not available Thursday on the company's web site, and a Gazprombank spokesman said he could not provide a copy of the magazine or the interview with Sobol.

In June, Gazprombank said it would not follow through with plans to sell a one-third stake to Dresdner Bank. The Russian bank said it was worth more than Dresdner Bank was willing to pay.

Analysts said Gazprombank was almost inextricably connected to its monopolist parent company, which is good for the bank's bondholders but potentially bad for equity investors seeking to benefit broadly from growth in the economy and in consumer spending.

"It's more of an investment bank that carries very large industrial and media assets in the interest of Gazprom," said Yevgeny Tarzimanov, an analyst at Standard & Poor's. The ratings agency recently upgraded Gazprombank to BB+, one notch below investment grade, acknowledging its close ties to Gazprom, which has a higher rating.

"It's a proxy for the health of the energy industry -- that's why an investor might look at it," said Richard Hainsworth, CEO of RusRating, which gauges the well-being of the country's financial institutions.

Gazprombank has boasted of its forays into consumer lending, but many of its retail customers are employees of the gas industry.

"Gazprom has the ability to control maybe 1 percent to 2 percent of the retail market just because gas companies employ a lot of people," said Natalya Orlova, a banking analyst at Alfa Bank.