VTB buys GUTA bank for symbolic price

MOSCOW - Vneshtorgbank (VTB) signed an agreement with Guta Bank’s shareholders on July 16 to buy about 86 percent in the bank for RUR 1 million (about $34,400), VTB President and CEO Andrey Kostin told reporters. VTB Vice President Mikhail Kuzovlev was appointed Guta Bank CEO.

According to Mr. Kostin, this is a purely business deal. "Buying the bank for an almost symbolic price, VTB plans to restore its activity very soon," he stressed. VTB will be liable for all of Guta Bank’s obligations.

Mr. Kostin said the Central Bank’s deposit in VTB ($700m) would partly be used to increase Guta Bank’s liquidity, and the remaining part would be used for VTB’s and Guta Bank’s operations, mainly to provide loans to clients.

The VTB chief noted that the deal did not affect all industrial assets of Guta Bank, but some of them were used as collateral. “If the terms of the deal are worse than we expect, these assets will go to VTB,” he said. According to him, VTB plans to unite its insurance company with Guta Bank’s insurance branch - Guta Strakhovaniye.

Further steps to restore Guta Bank’s activity would depend on the amount of damage incurred by Guta Bank, Mr. Kostikov said. The territory of VTB’s and Guta Bank’s networks was the same, he noted, but Guta Bank’s 15 branches in the Moscow region would be a significant backing for VTB.

Guta Bank suspended operations on July 6, 2004. Soon after that, reports came about talks between VTB and Guta Bank. About RUR 10bn (about $344m) was withdrawn from Guta Bank in June – almost a third of its net assets. As of June 1, Guta Bank’s balance sheet total was about RUR 50bn (about 41.7bn), while its net assets were RUR 33.684bn, and capital – RUR 4.5bn. The bank’s pre-tax profits in January-March 2004 were RUR 131.228m. Its loan debt was RUR 25.23bn as of June 1. The authorized capital was RUR 3.358bn. Guta Bank is owned by Guta Group.