MOSCOW, Dec 12 (PRIME) — The Moscow city government headed by former Moscow Mayor Yury Luzhkov never sought to acquire control over the Bank of Moscow, the bank’s former president Andrei Borodin said in an interview with PRIME on Monday.
“I believe the situation, when the stake of the city (authorities in the bank) was below 50% is normal,” Borodin said, adding that in 2007, the Bank of Moscow’s board of directors approved a strategy aimed at increasing the number of bank’s shareholders by reducing the stake held by the city government.
“It (the stake of the city government) reduced when a part of the Bank of Moscow’s shares was injected into the capital of Stolichnaya Strakhovaya Gruppa. It was a myth that the bank could only survive by means of the city’s and state employees’ account balances with the bank,” Borodin said.
The Bank of Moscow was established by the Moscow city government, while then the stake of the city authorities in the bank was reduced to 42.00%, and after an additional share offering, the city government received a 46.48% stake in the Bank of Moscow. In February, the Moscow city authorities sold their stake in the Bank of Moscow and a 25% plus one share in Stolichnaya Strakhovaya Gruppa, which holds 17.32% in the bank, to VTB Bank, the main unit of state-controlled VTB Group, for a total of 103 billion rubles.
Commenting on the Bank of Moscow’s previous shareholder structure, Borodin said that he controlled the bank along with other investors. “I did not want to withdraw from the capital or fully sell the bank even after Luzhkov was dismissed,” Borodin said, adding that he was quite satisfied with the shareholder structure.
He specified that by September 2010, he and Lev Alaluyev, former deputy chairman of the bank’s board of directors, jointly held 20.0% in the Bank of Moscow, and around 17.0% in the bank they controlled through Stolichnaya Strakhovaya Gruppa, while Goldman Sachs, Credit Suisse, and GCM respectively held 4.0%, 2.7%, and 6.5% in the bank.
Meanwhile, on September 28 Luzhkov was dismissed from his post as Moscow mayor by a decree signed by President Dmitry Medvedev following tensions between the two amid a media campaign against Luzhkov.
Borodin said that he understood that after Luzhkov’s dismissal the situation could change, but he was not ready for such fundamental changes. “I considered that the newly appointed mayor (Sergei Sobyanin) would need some time to examine the issue, but in two weeks he said that he was going to sell the city (government’s) stake (in the bank),” Borodin said, adding that he believed that Sobyanin had just fulfilled the instructions by the supreme authorities.
In February, Borodin and Dmitry Akulinin, former vice president of the Bank of Moscow, were accused of abusing their positions of power following an investigation into the embezzlement of about 12.76 billion rubles through a loan provided by the Bank of Moscow to real estate developer Premiere Estate. The latter used the funds to finance the purchase of a 58 hectare land plot in Moscow from TD Ramenskaya, a company owned by Luzhkov’s wife businesswoman Yelena Baturina.
In April 2011, Borodin reportedly left Russia, while in May, Borodin and Akulinin were put on an international most wanted list, and Moscow’s Tverskoi Court issued arrest warrants for both.
Under a continuing bailout of the Bank of Moscow initiated by the Russian authorities, VTB Group, consolidated 80.75% in the bank. Under a bailout agreement, the group’s unit VTB Debt Center, which earlier received 46.48% in the Bank of Moscow from VTB Bank bought stakes in the Bank of Moscow from its minority shareholders, the group said late September.
Commenting on the statement of the Central Bank of Russia (CBR) that the watchdog could not check the operations by the Bank of Moscow properly due to obstructions caused by the Moscow city’s previous government, Borodin said that the city authorities never influenced the central bank’s actions. “Luzhkov did not have any impact on Konstantin Shor (head of the CBR’s Moscow branch), as well as on the CBR’s top management,” Borodin said.
In early December, the Bank of Moscow filed three claims worth a total of 13.729 billion rubles with the Moscow Arbitration Court against Baturina’s TD Ramenskaya and Premiere Estate. Commenting on this, Borodin said that the security of the loan could fully cover the principal debt and interests.
“I think that this land plot should be sold at an open auction, as it would help to repay the principal debt and interest. The maximum price is to only be determined at the auction,” Borodin said, adding that the auction should be absolutely transparent.