The Central Bank of Russia has accelerated preparations to sell its stake in the bailed out Otkritie bank and may relinquish control of the lender before the end of 2021.
The regulator announcement On Tuesday, he invited interested strategic investors to begin the due diligence process and start preparing potential bids to take over the lender, which can be formally submitted in October.
The central bank had previously announced that it would seek to get rid of a stake in the bank next year, possibly through an initial public offering (IPO). Now the regulator says it will consider selling a controlling stake to a large strategic investor by the end of the year, depending on the level of market interest.
He also said he could divest Otkritie’s insurance or pension branches to allow for a quicker sale – a movement previously dismissed from the table by the president of Otkritie, Mikhail Zadornov.
In a statement issued shortly after the Central Bank announcement, Otkritie said it had opened a system to receive expressions of interest from investors specifically wishing to buy its Rosgosstrakh insurance division. Bids must be placed by September 9, the bank said. Rosgosstrakh was previously linked to Italy’s largest insurer Generali, which is preparing a potential two billion euro expansion in Russia.
Otkritie was bailed out in 2017 when she was on the verge of bankruptcy following a two-year financial and banking crisis after the annexation of Crimea, the imposition of sanctions and the fall in oil prices. Russian authorities have alleged foul play and demand the extradition of bank co-founder Boris Mints for embezzling $ 460 million just before the lender nearly collapsed. At the time of its rescue, Otkritie was Russia’s largest private financial institution.
If the Central Bank is unable to find a suitable strategic investor to take a 50% stake plus a share in the lender, it should proceed with a public sale of shares on the stock exchange.
The Russian financial sector has been hit hard by successive banking crises and Western sanctions. But under Governor Elvira Nabiulina, the regulator embarked on an $ 80 billion mission to clean up the industry and he believe Russian banks are stronger, more stable and transparent than ever. The sector was report record profits ahead of the coronavirus pandemic and recovered sharply from last year as the share of non-performing loans continues to be well below the levels of cash set aside for loss provisions.
Otkritia’s offloading will further reduce the role of the Central Bank as the direct owner of Russian banking sector assets, a controversial position given its primary function as a regulator. Earlier this year, an accounting maneuver saw the Central Bank transfer its stake in Russia’s largest lender, Sberbank, to the Ministry of Finance.