VTB of Russia gets USD1.2 billion from its 50% stake divestment in Tele2

By Rizza Sta. Ana

Dec 05, 2013 09:24 AM EST

As Russian bank VTB Group disclosed its accounts statement for the third quarter on Thursday, the documents revealed that the bank had sold its 50% stake in Tele2 for RUB40.4 billion or USD1.2 billion. VTB acquired the fourth-largest mobile operator in Russia back in April from Sweden's Tele2 for USD3.55 billion.

In October, VTB struck a deal to divest half of its ownership in the mobile operator to a consortium of investors, which includes Bank Rossiya affiliates and entities of billionaire tycoon Alexei Mordashov. Mordashov controls Severstal, a Russian steel maker company.

Bloomberg noted that at the time of the deal, the price was not named but the value was pegged at USD billion, including assumed debt. The value was based on the price at which the Russian bank had valued the stake on its books. Moreover, VTB said at that time that the deal was profitable to the financial institution.

VTB's third quarter results had reflected the bank's poor performance. Missing analysts' expectations, VTB's profit dipped 24% and increased its provisions for bad loans.

In a statement, VTB Group Chief Executive Officer Andrey Kostin said, "The group has continued to build loan provisions, which affected the bottom line. While macroeconomic factors continue to challenge financial institutions in our home market, VTB Group has achieved further healthy balance sheet growth and strong year-on-year performance."

VTB said its bad loans provisions increased from RUB12.7 billion to RUB22.1 billion, with non-performing loans decreasing to 5.4% of total lending. This was in comparison with 5.5% that VTB recorded at the end of its second quarter.

Shares of the Russian bank dove to a maximum of 1% and traded less than 0.1% lower at 4.57 kopeks in Moscow at 3PM today. VTB's market value had decreased around 66% since raising USD8 billion via a share sale at 13.6 kopeks back in 2007. VTB's initial public offering then was dubbed the biggest listing in the world that year.

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