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. Last Updated: 07/27/2016

UralSib Stock Briefly Up on Watchdog Statement

Shares in UralSib bank briefly jumped 15 percent Thursday after the government's markets watchdog released what it later said was an erroneous statement regarding a possible acquisition by the Sistema conglomerate.

The Federal Service for Financial Markets said on its web site Thursday morning that it had instructed Sistema, controlled by billionaire Yevgeny Yevtushenkov, to make an obligatory takeover offer for UralSib bank in accordance with Russian law.

By law, a company must make a formal takeover bid if it acquires a 30 percent stake or more in another firm.

By early afternoon, however, the watchdog said the statement had been a "technical error" and that it had started an official investigation into possible price manipulation.

UralSib's stock rose sharply after the statement but fell back to earlier levels after the regulator admitted its mistake, finishing down 2.6 percent on the day.

UralSib denied that it was in talks on selling a stake.

"We are not in talks either with Sistema or with any Russian or overseas financial structures regarding a sale of shares in UralSib bank," executive director Alexander Vikhrov said by telephone.

Sistema was also quick to issue a denial. "It's not true. We do not have any stake in UralSib," company spokesman Kirill Semyonov said by telephone. He added that there were no plans to buy shares "for the time being."

Sistema, one of the country's most diversified holdings, includes the Moscow Bank for Reconstruction and Development, and its management has indicated that it would like to increase its banking holdings.

A spokeswoman from the Federal Anti-Monopoly Service said it was not considering any current application from Sistema in relation to a potential acquisition of a stake in UralSib.

"When I read [about the watchdog's announcement], I nearly fell off my chair," said Mark Rubinstein, banking analyst at Metropol brokerage. "The point is ... it's a very odd mistake to make."

He dismissed the possibility of share-price manipulation, however.

"It's hard to imagine that someone would manipulate [the regulator's] web site," he said, noting that UralSib's shares were not very liquid, which means that there is only sporadic trading in the bank's shares on local exchanges.

UralSib's management has made little secret of the fact that a large stake --from 25 percent to 30 percent -- in parent company UralSib Corporation is for sale, either to a strategic investor or through an IPO. Analysts said the earlier statement from the regulator might indicate that there is a strategic deal in the offing.

"UralSib is a bank potentially for sale," said Natalya Orlova, an analyst at Alfa Bank. "It released poor financial results in the first half ... and it seems that the management team doesn't have any clear strategy to [grow] the bank."