Qatar Sovereign Fund Buys Stake In Russian Bank VTB

Qatar Holding, along with Azerbaijan’s SOFAZ and Norges Bank Investment Management, invested $479-639 million each in VTB.

The sovereign wealth funds of Qatar, Norway and Azerbaijan and China Construction Bank have bought about 55 per cent of the new shares on offer from VTB, Russia’s second-largest bank, it said on Wednesday.

VTB said it has completed its 102.5 billion-rouble ($3.3 billion) offering of new shares at 4.1 kopecks each. The government’s stake, which did not participate in the offering, was diluted to 60.9 per cent from 75.5 per cent.

A share issue was essential for VTB to improve its capital adequacy ratio and fuel lending growth targets for this year set at between 15 and 20 per cent.

Chief executive Andrei Kostin, under whom VTB also offered shares in 2007 and 2011 at 13.6 kopecks and 9.15 kopecks respectively, told President Vladimir Putin in Sochi that sovereign wealth funds are “a quality label” for the bank.

“It’s a signal for other investors – if a sovereign wealth fund had come others may follow,” Kostin said. He added that each of the three sovereign funds – Azerbaijan’s SOFAZ, Norges Bank Investment Management and Qatar Holding – invested between 15 billion and 20 billion roubles ($479-639 million) each.

Investors from Brazil also took part, he said.

VTB has placed shares via the Moscow Exchange, executing Putin’s earlier order to conduct state privatisation deals in Russia to turn Moscow into a global financial centre rivalling New York or London.

The share issue will boost VTB’s Tier 1 capital ratio to 11.9 per cent of assets from 10.3 percent at Dec. 31.

The new Tier 1 ratio, a measure of a bank’s ability to absorb losses, will be higher than Russia’s biggest lender Sberbank’s ratio, which stood at 10.4 percent at the end of last year.

“The transaction allows us to meet our capital adequacy targets and also provides funding for the continued growth of the business,” Kostin said in a statement.

VTB’s existing shares closed trading at 4.99 kopecks on Wednesday.

VTB management has promised to present a new strategy later this year, turning to a new page in the bank’s history. On Tuesday Kostin told Reuters TV he expects VTB to post a record net profit of over 100 billion roubles in 2013.