The $14bn bail-out of Bank of Moscow was a vastly inflated move aimed at tightening the grip of VTB, the Russian state bank, over Moscow assets, according to people close to Andrei Borodin, former president of the collapsed lender.
They argue that the bail-out was politically motivated and part of a carve-up of Moscow assets following the controversial ousting of Yury Luzhkov as the city’s mayor last year.
VTB spent $3.7bn on acquiring the city government’s 46.5 per cent stake in Bank of Moscow in February. The state-controlled bank then battled to take control from the management team of Mr Borodin, a close ally of Mr Luzhkov, only to claim it had found a morass of bad loans on its balance sheet.
One of the people close to Mr Borodin said: “Bank of Moscow never should have got a state bail-out because there was no run on the bank and there were no problems with creditors. The bail-out was not to Bank of Moscow but to its shareholders, which is clear evidence that all the problems are artificial and in fact the state aid is directed to someone else.”
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