By Andrei Skvarsky.
Sberbank and VTB, Russia’s two main banks, have announced they have no plans to issue shares of types that European investors are forbidden to buy from them under sanctions imposed by the European Union on the two state-controlled lenders on July 29.
All EU nationals and entities are prohibited from buying or selling new bonds, equity or other financial instruments with a maturity of more than 90 days issued by Sberbank, VTB, any of three other major state-owned Russian banks – third-biggest lender Gazprombank, Vnesheconombank and Russian Agricultural Bank, or any firm acting on their behalf.
In announcements released on August 7, Sberbank and VTB said they had no near-term plans to issue any additional shares at all.
Sberbank said that it “sees no need and has no plans to raise additional equity capital by issuing new shares”, and that its “current and forecast capital adequacy ratio is adequate and fully complies with all regulatory requirements under Russian Accounting Standards and the International Financial Reporting Standards (IFRS)”.
“Sberbank sees no reason to change the weight of Sberbank shares in the structure of capital markets indexes due to the perceived threat of issuing new shares, the investment in which is currently subject to specific sanction limitations in some jurisdictions,” the lender said.
It said that, making use of the July 21 law “On Additional Measures to Support the Financial System of the Russian Federation”, it had decided to convert subordinated loans obtained from Russia’s central bank into unsecured subordinated loans with “a maturity term of up to 50 years and (or) the possibility of extension by the borrower no more than once in 50 years (without securing approval of the lender)”.
VTB said it is “fully compliant with all capital adequacy requirements set by Russian and international regulators”.
Owing to government support, it “has no plans to issue additional shares through the end of 2014 or in 2015”, and hence “does not envisage the creation of a new class of shares that could affect the accuracy of stock market indices”, the bank said.
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