Alastair Marsh, FT Tilt

VTB had full knowledge of the state of Bank of Moscow’s balance sheet before taking operational control of the bank, according to former Bank of Moscow president Andrei Borodin.

In an interview with FT Tilt, Borodin said from the beginning of March VTB had full access to the capital city lender’s loan books and data room and was given an opportunity to sell out of the Moscow bank before consolidating a majority stake.

A spokeswoman for VTB denied Borodin’s claims and told FT Tilt that the bank was only able to evaluate the Moscow lender’s documents at the end of April after it had gained operational control (and by which time Borodin had sold his stake).

State-owned VTB, Russia’s second largest bank, acquired a 46.5 percent stake in what was the country’s sixth largest bank from the Moscow city government in late February. Shortly thereafter VTB moved to boost its holding in the bank and as a result Borodin contacted VTB chief executive Andrei Kostin to say he had decided to sell his near 20 per cent stake.

From the beginning of March a team of between 20-30 VTB staff headed by former VTB deputy chief executive Mikhail Kuzovlev, who has since replaced Borodin as president of Bank of Moscow, spent every working day in the bank’s headquarters with full access to all the bank’s documents conducting due diligence on the transaction, said people close to Borodin.

On or around March 21 a delegation from VTB of approximately 12 people headed by Kostin met with a 9-person team from Bank of Moscow to discuss the results of VTB’s due diligence, the sources added. VTB declined to comment on whether such a meeting took place or what was discussed.

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