Alfa Bank and VTB 24 are combined. It seems that the merger of Alfa-Bank and VTB has already begun
Why would Andrei Kostin buy the bank of Michael Friedman living in London
Rumors that Alfa Bank could be sold to another major player appeared in early 2018. Today it is clear that this process is not far from its completion. The publication of the “Kremlin report” made the bank a toxic asset for Mikhail Fridman, Peter Aven and his other major shareholders. They made a choice between Russia and the West five years ago, now it remains to settle the formalities.
To the founder of Alfa Group ( owns over 75% of Alfa-Bank) Mikhail Fridman I don’t like the attitude towards Russian billionaires in London and Washington. " We are perceived as Russian oligarchs, no matter what we do ... In the West - a very simplified view of Russia, as well as in Russia about the West: Russia is the oligarchs, and all oligarchs are agents of the Kremlin", - complained Friedman in an interview with Forbes magazine. But who specifically offended a simple Russian banker in a foreign land?
Met as a stranger
The emotions of Mikhail Fridman can be understood. He actually broke with his homeland, lives in the UK and is its tax resident. But he is still considered a stranger. Although it is possible that during an interview with the Russian business magazine, Friedman recalled a very specific story, or rather, two stories. We are talking about the interrogations that his long-time partner, the president of Alfa Bank, underwent upon arrival in the USA Peter Aven.
Sources " Our Version"They say that during the next routine trip to the US, Avenue had to answer uncomfortable questions from employees FBI. Agents met a respected businessman right at the airport and, not allowing them to rest after a long flight, dragged him for many hours of interrogation. Like some kind of terrorist. For Peter Aven, who, incidentally, is an honorary citizen of Oklahoma, such a meeting was a complete surprise. And well, if it was an isolated case! During Aven’s next trip to America, history repeated itself.
Mikhail Fridman and Peter Aven
The FBI’s interest in the personality of the Russian banker and his partners is understandable. Mikhail Fridman, Peter Aven and another co-owner of Alfa Bank Herman Khan mentioned in the dossier of a former agent of the British MI-6 Christopher Steele. In the United States, this document, we recall, formed the basis of the proceedings regarding the possible interference of Russia in the presidential election. Others would be happy in their place - they would serve their native country, and you can get a reward. But, since at least half of Alfa Group’s owners' businesses are located in the West, sanctions have become a serious threat to them.
In 2017, even before the so-called “Kremlin list” appeared, the leadership “ Alfa Bank"Made a titanic effort to minimize sanctions risks. Friedman and Aven Bank, in fact, ran ahead of the engine to transfer defense loans to a sanitized Promsvyazbank. Market participants say that Alpha was ready to transfer loans at a large discount - if only faster. However, the following interrogations Peter Aven in the United States indicate that this did not help the case. Apparently, the president of Alfa-Bank and its largest shareholders understand that new sanctions could simply kill this credit institution.
Yes, Alpha is one of the eleven systemically important banks in Russia, which account for more than 60% of the banking sector assets. Well, so what? Unlike other participants in this list, most of which are banks with state participation, the government will not save the brainchild of Friedman and Aven. So, they urgently need to get rid of the toxic asset.
Process in progress
In the spring, analysts called several potential interested parties who allegedly looked closely at Alfa Bank. Among those were listed Sberbank, VTB and Uralsib. Today we can say with confidence that the brainchild of Friedman is in the process of transition under the control of managers from VTB. So, in early October, a native of VTB was elected the first deputy chairman of the board of Alpha Vladimir Verkhoshinsky. This event did not become a sensation. Verkhoshinsky came to " Alfa Bank»In August and took up the position of chief managing director. Following this, the bank began a rapid renewal of personnel. At this point, the lending institution has updated its marketing team. In November, the chief operating director, Maria Shevchenko, and the head of the Treasury block, Igor Knyazev, plan to leave the bank.
Biography Vladimir Verkhoshinsky contains an important detail: in 2011, when VTB bought Bank of Moscow, a young manager moved into this structure, and immediately became vice president. In 2016, the Bank of Moscow was reorganized by joining VTB, and Mr. Verkhoshinsky was elected a member of the board. It can be assumed that in the case of Alfa-Bank’s merger, the process will go much faster - it would not seem to be necessary to reorganize it.
Planned evacuation
It is likely that after the merger with VTB, the current president " Alfa Bank» Peter Aven finally leave the territory of the Russian Federation. It seems that he and his associates began to prepare their evacuation from Russia long before the imposition of sanctions. Recall, for example, their sale of shares in a Russian oil company TNK-BP in 2013. Alfa-Bank beneficiaries receive about their share in it 14 billiondollars, with this money they created an investment fund in Switzerland L1 ennegrywhose goal was the purchase of oil and gas assets around the world.
If Alfa-Bank comes under the control of VTB, this will mean further monopolization of the banking sector in Russia, a significant share of which is already controlled by the largest credit institutions with state participation. This means that Russians may face a reduction in deposit rates, an increase in interest on loans and a deterioration in the quality of banking services.
Head of VTB Andrey Kostin
But there is another important point. According to some experts, the "merger" of the two banks will be carried out through the exchange of shares between interested parties. VTB may redeem some share " Alfa Bank"For money, but for most of it Friedman, Aven and other owners may receive VTB shares, which they can then sell or pledge. If the situation develops according to this scenario, then the “locomotive of the people's IPO” under the leadership of Andrey Kostin will fall in price again. According to market rules, an absorbing company almost always loses part of its value. But does Kostin and the managers of the sanctioned state bank have anything to do with the market price of his shares? It seems that they consider the Russian government to be the sole owner of VTB, and therefore they will again ask him for money for, frankly, not the most necessary deal. What prevents VTB occupy a niche yourself " Alfa Bank" now? And will the experience of a private credit institution, sharpened by a different, market efficiency, be at least somehow useful for a state bank?
Alexey Privalov
11:32 27.07.2018
Exclusive interview with the CEO of Alfa Group in Ukraine, Chairman of the Board of Ukrsotsbank Ivan Svitek and chairman of the board of Alfa Bank Ukraine Victoria Mihayle agency Interfax-Ukraine.
(Part one)
- When will the merger of Alfa Bank and Ukrsotsbank complete??
Ivan Svitek:The legal merger is planned for the I half of next year. But before the merger of such two giants as Alpha and Ukrsots, and there were no such mergers in the Ukrainian market yet, a lot of preparatory work needs to be done. Now, as part of the migration, we are trying to transfer all active customers of Ukrsotsbank to the Alpha site. Our goal, to which we are systematically moving, is to transfer 75% of all active customers, including in business volumes, to Alfa Bank's balance sheet by the end of 2018. And you can already see this by the dynamics of the balance of Ukrsotsbank.
Victoria Michael: In preparation for migration, we developed a know-how - a soft 2-in-1 migration format, when the branches of two banks, Ukrsots and Alfa Bank, are located on the site of Ukrsotsbank. Within this format, we can tell a client of Ukrsots, while he uses the usual service in the usual branch, immediately talk about all the advantages of switching to servicing at Alfa Bank. The main argument, of course, is Alpha's manufacturability. Although we took a lot of cool ideas and projects of Ukrsots into the combined structure, including, for example, the Carbon card beloved by customers. Thus, customers in “2 in 1” branches transfer liabilities from Ukrsots to Alpha in a convenient format with a premium, receive more premium cards and products.
- Does the same soft migration work for business and corporate clients?
V.M .:Of course. We are doing everything to make the transition more convenient and practical for all segments of customers. A soft migration plan has been agreed with the NBU and the regulator understands that when the banks merge, the non-migrated clients remaining on the balance sheet of Ukrsotsbank will still be transferred to Alfa Bank. Therefore, we made a simplified legal and compliance procedure during migration in order to minimize the involvement of customers, including the documentation of the transition.
We will be glad to see everyone else who, for various reasons, does not migrate to Alpha before the end of the year, on our balance sheet “on the night from Friday to Monday,” when the legal merger takes place.
From your words, the key goal of soft migration is a deliberate transition of clients and their acquaintance with Alfa Bank?
V.M .: And there is. On the current volume of business, the approach to "fall asleep in Ukrsots and wake up in Alpha", making a welcome pack with information about changes for customers, is not possible. Yes, this is not the business culture in which we work and to which we strive. And we see a completely different attitude when the client begins to understand that the transition occurs within the framework of one group, that the teams of the two banks are very intertwined, and often even combined. Often, nothing changes for the client in the current work with the bank - he is served by the same managers as before, but now employed by Alfa-Bank. It is important for us to “bite off” Alpha in front of the client, showing him new opportunities on a new platform for him.
And it works very well. Migration has been going on for about a year now, and we see that Ukrsotsbank customers who have switched to Alfa Bank for service are increasing their business at the new site. For example, we are more actively selling credit products, which Ukrsotsbank has not done for a very long time. In addition, within the framework of our service model, all affluent customers at Alfa Bank receive a personal manager ... Internet banking and a mobile application in Alpha are more modern and high-tech.
- What will happen to the network of the combined bank?
V.M .:The network will be reduced due to the closure of inefficient as well as doubled sales points in neighboring locations. We leave only the best branches and locations. Already, we are transferring to the balance sheet of Alfa Bank branches operating in the 2-in-1 format. When we understand that the basic volume of customers at the point of sale has been transferred from Ukrsotsbank to Alpha, we decide to close the Ukrsotsbank branch here.
Now we are entering the final wave of migration, in which, out of the 301 branches of Alfa Bank and Ukrsotsbank, as of the beginning of 2018, by the end of the year, there will remain 241 branches of Alfa Bank and 8 hubs in different regions that will operate in a 2-in-1 format " In these hubs, Ukrsotsbank customers who did not manage to switch to Alfa service on their own will be able to receive standard service. Of course, there will be no new products and services here, since we stopped selling all active and passive products and services at the Ukrsotsbank site: we do not issue new cards, we only reissue plastic within the framework of existing, yet non-migratory salary projects, we stopped accepting retail deposits.
According to recent statistics from the National Bank, Alpha had 259 branches in the middle of this year, and 209 in Ukrsots (at the beginning of the year, 187 and 231, respectively). In total, this is more than 301 branches of which you speak. Is this because of the 2 in 1 format?
V.M .: Yes. We, again, are in the final stage of soft migration, in which about 80 branches of Ukrsots by the end of the year should leave the “2 in 1” format and become branches of Alfa Bank. Branches that did not have the potential to convert to 2-in-1 format are closing.
- In the case of the Bank of Cyprus, this format of migration was not used.
V.M .: With the Bank of Cyprus was a completely different strategy and a different model. Bank of Cyprus was significantly smaller than Ukrsotsbank. He did not have such a volume of retail portfolio as the portfolio of Ukrsotsbank, with which Alpha, if you look at our indicators, began to work very actively. A highly effective recovery process for troubled retail customers is underway as part of debt settlement.
Customers come for service in Alpha, and we have established a completely different level of relationship. The Bank of Cyprus did not have the same SME portfolio as Ukrsots has. After all, the main purpose of the purchase of Ukrsotsbank was to buy a business, increase the customer base.
In addition, Ukrsots and I are very different both in terms of products and in terms of IT components. Therefore, a merger through a factoring agreement or “overflow” without preparation is impossible. We need to clean the systems, prepare the gateways, reduce the amount of data, clean the archive in order to make the transition.
We are also carefully preparing for the legal merger of the two banks, trying catch up with the time allotted in order to do this according to simplified procedures. We finished the Ukrsotsbank squeeze-out, reduced the bases, since the fewer there are, the less gateways need to be built and the easier the merger process will go.
I.S.: Another reason why we went so deeply and so carefully into the migration process ... You can legally merge two banks into one, but still two banks will remain inside - two systems, different products.
“Do you want to avoid this?”
I.S .: Yes. The most difficult thing is to really combine the two banks into one, to avoid unnecessary expenses, to combine different cultures, processes, products. We have been working on this literally since the deal in the fall of 2016.
In addition, all that we talked about now is the client side, what the market sees. But for customers and the market to see this, a huge internal work was done to unify products, match the filling of products, synchronized approaches to assessing risks by assets and liabilities, by IT support.
- Problem clients of Ukrsotsbank so far remain in it?
I.S .: NPL portfolio is one of the key focuses of work. A lot of work was done in 2017 and the same big plans for 2018. By the end of the year, we plan to greatly reduce both the loan portfolio and the portfolio of investment and operating real estate. Already at the exit are quite large deals. In addition, the balance of Ukrsotsbank will decrease due to the closure and sale of branches. Alfa-Bank branches are formatted differently, we do not need large areas. Including because we are actively taking customers from the network to remote service. By providing customers with a qualitatively different level of service from Alpha, this becomes possible.
Of course, there is an NPL that we cannot touch because of the moratorium. Different models of mergers can be agreed with the shareholders: both legal merger, and, for example, the allocation of the NPL portfolio in a separate financial company. In terms of manageability, this may be a more effective solution for dealing with bad debts. This issue is still being negotiated.
The economies of scale what will result in the employees of Ukrsotsbank and Alfa Bank? How many of them have already lost or will still lose their jobs?
I.S .: If we take the total number of employees of Alfa Bank and Ukrsots at the beginning of 2017 and now, this figure has not changed.
What is the point then? It is believed that due to the merger there is an opportunity to reduce costs, including staff costs.
I.S .: While we are working in the “2 in 1” format, we are really doubling the resource - the staff on the network, accounting, back-office. There will be a certain reduction in staff during the transition of the network under the sign of Alfa Bank and during the merger, but it will not be large. Yes, on the one hand, we are now cutting people somewhere, but in other directions we need people, because, for example, a contact center, digital are actively developing, new products appear, we are more actively engaged in collecting debts. In Ukrsotsbank, for example, we don’t there was a contact center, they were not actively involved in collecting.
- In Ukrsotsbank there was no contact center?
V.M .: Did not have. The bank did not sell credit products so actively, there was a different model. All loan products are sold on Alpha today. Therefore, having reduced the network from 309 to 241 branches, we will make it more efficient and introduce a new, more advanced service model.
- Are there any geographical features of the migration process?
V.M .: We keep almost the same map as it was. Accordingly, in each city we will be represented by many branches.
- Clients from Western Ukraine are also willingly moving to Alpha, as in other regions?
I.S .:This is my favorite question, which I always answer with an example. When we launched the migration pilot at the start, we took Kiev and Lviv for comparison. They wanted to try in case there would be any difficulties in Western Ukraine. So, according to the results of the pilot, Lviv did better than Kiev.
Almost all regions go exactly at our place. Each region has specifics, and the migration project takes it into account very subtly.
Looking at the dynamics of assets, the migration process is not yet very noticeable. If at the beginning of the year both banks had about 58 billion UAH of assets, then as of June 1, Alpha had about the same amount - 57.3 billion UAH, and at Ukrsotsbank - minus 5 billion UAH. Why is that? And what numbers do you want to reach?
B. M.: By numbers, we see this migration from the inside. But according to open data, it is better to analyze the passive side of the balance sheet, for example, deposits, in order to understand how much business is shifting. The active part of the balance is much more difficult to shift. Alpha is growing in retail, stable in volumes of corporate lending and fulfills distressed assets. The decrease in the balance of Ukrsots in the active part is also associated with the development of problem and complex debts and investment real estate.
We have many significant deals ahead: I think by the end of the year we will see a reduction in the balance of Ukrsotsbank in risk-weighted assets from UAH 23 billion to about UAH 17 billion. Giving more accurate numbers is quite difficult, because the dynamics are not simple. But if in the near future there will be several major transactions for the restructuring of bad debts and the sale of significant objects, the figures could quickly go to the indicated 17 billion UAH.
Although the goal is not in the conditional indicator of the risk-weighted asset, but in its deep filling. Because it is more important for us that loans become workers, and the client receives quality service on a platform understandable to him.
At the beginning of this year, a total of two banks accounted for 6.2% of the assets of the Ukrainian banking system, as of June 1 - 5.9%. What is your target at the end of the process? Or is it more important for you to keep alive, good customers of Ukrsotsbank, and only then build up your assets?
I.S .:We have a goal to grow in quantity and quality. But the priority, of course, is quality. We may not be increasing our market share, but in this fraction of the volume we are still changing qualitatively. As Victoria said, we are actively working in digital, with distressed assets. There are many distressed assets in Ukrsots, on which we successfully negotiate, structure, sell. A fairly large struggle for quality is taking place inside, which is clearly seen in the first months of this year.
- Your Alpha profit actually covers the losses of Ukrsotsbank
I.S .: Yes, the two banks of the group together are profitable.
V.M .: Alpha's operating income for the first half of 2018 is UAH 1.4 billion, and the net result is UAH 414 million. This is consistent with our forecast data, which Ivan said in an interview at the beginning of the year that Alpha will meet the end of the year with a net profit of UAH 800 million. If you compare with last year, when the financial result amounted to slightly less than UAH 600 million, then this is quite a big progress, since the introduction of the IFRS standard gives a certain correction.
I.S .: Ukrsotsbank also has good dynamics, because the bank begins to maintain operational efficiency. Although everyone already knows that we are one, so far these are two business units on the market, and Ukrsots must comply with all regulatory requirements. Therefore, it is easier for us to transfer liabilities from him than working assets. Therefore, working with assets is the development of quality. And so Ukrsots keeps operating income, albeit a small one. And its 370 million UAH in the half-year minus occurred mainly due to reserves.
Previously, Ukrsots’s loss was forecasted at the end of this year to about UAH 700 million, compared with UAH 800 million of Alfa Bank’s profit.
I.S .: If we take a linear forecast for the available indicators for the six months, then we reach this level. We are not moving away from the intended strategy. And we really hope that the indicators of both Ukrsots and Alpha will be better due to the current dynamics of the processes.
Now Alfa-Bank, taking into account the indicators of Ukrsotsbank, is the largest private bank in Ukraine. At the end of the migration and merger processes, do you plan to keep this title?
I.S .: We plan to become the largest and best private bank.
- At what stage are the negotiations on the brand of the combined bank?
- I.S .: Negotiations are still ongoing. But if there is a new brand, it will appear at the time of the legal merger, when a new entity appears on the market. We aim for the first half of next year.
- And what options are being considered?
I.S .:There are hundreds of options, but a key choice between three: Ukrsotsbank, Alfa Bank and the third new brand.
- Which option has more supporters?
I.S .: We are in discussion. The complexity of the problem is that each option has unconditional pros and cons. But, I repeat, I believe that at the time of the merger, a new subject will arise that underwent an incredible transformation. This subject will be worthy of a new name. It's just too early to say what kind of name it will be.
Endingread the text of the interview on the website of the Interfax-Ukraine agency
Rumors that Alfa Bank could be sold to another major player appeared in early 2018. Today it is clear that this process is not far from its completion. The publication of the “Kremlin report” made the bank a toxic asset for Mikhail Fridman, Peter Aven and his other major shareholders. They made a choice between Russia and the West five years ago, now it remains to settle the formalities.
To the founder of Alfa Group ( owns over 75% of Alfa-Bank) Mikhail Fridman I don’t like the attitude towards Russian billionaires in London and Washington. " We are perceived as Russian oligarchs, no matter what we do ... In the West - a very simplified view of Russia, as well as in Russia about the West: Russia is the oligarchs, and all oligarchs are agents of the Kremlin", - complained Friedman in an interview with Forbes magazine. But who specifically offended a simple Russian banker in a foreign land?
Met as a stranger
The emotions of Mikhail Fridman can be understood. He actually broke with his homeland, lives in the UK and is its tax resident. But he is still considered a stranger. Although it is possible that during an interview with the Russian business magazine, Friedman recalled a very specific story, or rather, two stories. We are talking about the interrogations that his long-time partner, the president of Alfa Bank, underwent upon arrival in the USA Peter Aven.
Sources " Our Version"They say that during the next routine trip to the US, Avenue had to answer uncomfortable questions from employees FBI. Agents met a respected businessman right at the airport and, not allowing them to rest after a long flight, dragged him for many hours of interrogation. Like some kind of terrorist. For Peter Aven, who, incidentally, is an honorary citizen of Oklahoma, such a meeting was a complete surprise. And well, if it was an isolated case! During Aven’s next trip to America, history repeated itself.
The FBI’s interest in the personality of the Russian banker and his partners is understandable. Mikhail Fridman, Peter Aven and another co-owner of Alfa Bank Herman Khan mentioned in the dossier of a former agent of the British MI-6 Christopher Steele. In the United States, this document, we recall, formed the basis of the proceedings regarding the possible interference of Russia in the presidential election. Others would be happy in their place - they would serve their native country, and you can get a reward. But, since at least half of Alfa Group’s owners' businesses are located in the West, sanctions have become a serious threat to them.
In 2017, even before the so-called “Kremlin list” appeared, the leadership “ Alfa Bank"Made a titanic effort to minimize sanctions risks. Friedman and Aven Bank, in fact, ran ahead of the engine to transfer defense loans to a sanitized Promsvyazbank. Market participants say that Alpha was ready to transfer loans at a large discount - if only faster. However, the following interrogations Peter Aven in the United States indicate that this did not help the case. Apparently, the president of Alfa-Bank and its largest shareholders understand that new sanctions could simply kill this credit institution.
Yes, Alpha is one of the eleven systemically important banks in Russia, which account for more than 60% of the banking sector assets. Well, so what? Unlike other participants in this list, most of which are banks with state participation, the government will not save the brainchild of Friedman and Aven. So, they urgently need to get rid of the toxic asset.
Process in progress
In the spring, analysts called several potential interested parties who allegedly looked closely at Alfa Bank. Among those were listed Sberbank, VTB and Uralsib. Today we can say with confidence that the brainchild of Friedman is in the process of transition under the control of managers from VTB. So, in early October, a native of VTB was elected the first deputy chairman of the board of Alpha Vladimir Verkhoshinsky. This event did not become a sensation. Verkhoshinsky came to " Alfa Bank»In August and took up the position of chief managing director. Following this, the bank began a rapid renewal of personnel. At this point, the lending institution has updated its marketing team. In November, the chief operating director, Maria Shevchenko, and the head of the Treasury block, Igor Knyazev, plan to leave the bank.
Biography Vladimir Verkhoshinsky contains an important detail: in 2011, when VTB bought Bank of Moscow, a young manager moved into this structure, and immediately became vice president. In 2016, the Bank of Moscow was reorganized by joining VTB, and Mr. Verkhoshinsky was elected a member of the board. It can be assumed that in the case of Alfa-Bank’s merger, the process will go much faster - it would not seem to be necessary to reorganize it.
In turn, information on the merger is officially denied. Comment by Alfa-Bank press service: “There are no plans to sell Alfa-Bank and they are not being considered. Rumors about the sale of Alfa-Bank VTB, as well as about any other form of merger with VTB, are completely untrue. ”
Planned evacuation
It is likely that after the merger with VTB, the current president " Alfa Bank» Peter Aven finally leave the territory of the Russian Federation. It seems that he and his associates began to prepare their evacuation from Russia long before the imposition of sanctions. Recall, for example, their sale of shares in a Russian oil company TNK-BP in 2013. Alfa-Bank beneficiaries receive about their share in it 14 billiondollars, with this money they created an investment fund in Switzerland L1 ennegrywhose goal was the purchase of oil and gas assets around the world.
If Alfa-Bank comes under the control of VTB, this will mean further monopolization of the banking sector in Russia, a significant share of which is already controlled by the largest credit institutions with state participation. This means that Russians may face a reduction in deposit rates, an increase in interest on loans and a deterioration in the quality of banking services.
But there is another important point. According to some experts, the "merger" of the two banks will be carried out through the exchange of shares between interested parties. VTB may redeem some share " Alfa Bank"For money, but for most of it Friedman, Aven and other owners may receive VTB shares, which they can then sell or pledge. If the situation develops according to this scenario, then the “locomotive of the people's IPO” under the leadership of Andrey Kostin will fall in price again. According to market rules, an absorbing company almost always loses part of its value. But does Kostin and the managers of the sanctioned state bank have anything to do with the market price of his shares? It seems that they consider the Russian government to be the sole owner of VTB, and therefore they will again ask him for money for, frankly, not the most necessary deal. What prevents VTB occupy a niche yourself " Alfa Bank" now? And will the experience of a private credit institution, sharpened by a different, market efficiency, be at least somehow useful for a state bank?
Rumors that Alfa Bank could be sold to another major player appeared in early 2018. Today it is clear that this process is not far from its completion. The publication of the “Kremlin report” made the bank a toxic asset for Mikhail Fridman, Peter Aven and his other major shareholders. They made a choice between Russia and the West five years ago, now it remains to settle the formalities.
Plot: Banks and the financial crisis
The founder of Alfa Group (owns more than 75% of Alfa Bank) Mikhail Fridman does not like the attitude to Russian billionaires in London and Washington. “We are perceived as Russian oligarchs, regardless of what we do ... In the West - a very simplified view of Russia, as well as in Russia about the West: Russia is the oligarchs, and all oligarchs are agents of the Kremlin,” complained Friedman in an interview with Forbes magazine. But who specifically offended a simple Russian banker in a foreign land?
Met as a stranger
The emotions of Mikhail Fridman can be understood. He actually broke with his homeland, lives in the UK and is its tax resident. But he is still considered a stranger. Although it is possible that during an interview with the Russian business magazine, Friedman recalled a very specific story, or rather, two stories. We are talking about interrogations, which, upon arrival in the US, his long-time partner, the president of Alfa Bank Peter Aven, underwent.
Our Version sources say that during a routine trip to the United States, Aven had to answer uncomfortable questions from FBI employees. Agents met a respected businessman right at the airport and, not allowing them to rest after a long flight, dragged him for many hours of interrogation. Like some kind of terrorist. For Peter Aven, who, incidentally, is an honorary citizen of Oklahoma, such a meeting was a complete surprise. And well, if it was an isolated case! During Aven’s next trip to America, history repeated itself.
The FBI’s interest in the personality of the Russian banker and his partners is clear. Mikhail Friedman, Peter Aven and another Alfa-Bank co-owner German Khan were mentioned in the dossier of the former MI6 British agent Christopher Steele. In the United States, this document, we recall, formed the basis of the proceedings regarding the possible interference of Russia in the presidential election. Others would be happy in their place - they would serve their native country, and you can get a reward. But, since at least half of Alfa Group’s owners' businesses are located in the West, sanctions have become a serious threat to them.
In 2017, even before the so-called “Kremlin list” appeared, Alfa-Bank management made a titanic effort to minimize sanctions risks. Bank of Friedman and Aven, in fact, ran ahead of the engine to transfer defense loans to the rehabilitated Promsvyazbank. Market participants say that Alpha was ready to transfer loans at a large discount - if only faster. However, the subsequent interrogations of Peter Aven in the United States indicate that this did not help. Apparently, the president of Alfa-Bank and its largest shareholders understand that new sanctions could simply kill this credit institution.
Yes, Alpha is one of the eleven systemically important banks in Russia, which account for more than 60% of the banking sector assets. Well, so what? Unlike other participants in this list, most of which are banks with state participation, the government will not save the brainchild of Friedman and Aven. So, they urgently need to get rid of the toxic asset.
As it became known to the media, shortly before the conflict with the official of the Ministry of Industry and Trade, Denis Pak, Russian football players Pavel Mamaev and Alexander Kokorin beat the driver of the First Channel TV presenter Olga Ushakova.
Process in progress
In the spring, analysts called several potential interested parties who allegedly looked closely at Alfa Bank. Among those were Sberbank, VTB and Uralsib. Today it is safe to say that the brainchild of Friedman is in the process of transition under the control of VTB managers. So, in early October, Vladimir Verkhoshinsky, a native of VTB, was elected the first deputy chairman of the board of Alpha. This event did not become a sensation. Verkhoshinsky came to Alfa-Bank in August and took up the position of Chief Executive Officer. Following this, the bank began a rapid renewal of personnel. At this point, the lending institution has updated its marketing team. In November, the chief operating director, Maria Shevchenko, and the head of the Treasury block, Igor Knyazev, plan to leave the bank.
The biography of Vladimir Verkhoshinsky contains an important detail: in 2011, when VTB bought Bank of Moscow, the young manager moved into this structure, and immediately became vice president. In 2016, the Bank of Moscow was reorganized by joining VTB, and Mr. Verkhoshinsky was elected a member of the board. It can be assumed that in the case of Alfa-Bank’s merger, the process will go much faster - it would not seem to be necessary to reorganize it.
Planned evacuation
It is likely that after the merger with VTB, the current president of Alfa Bank Peter Aven will finally leave the territory of the Russian Federation. It seems that he and his associates began to prepare their evacuation from Russia long before the imposition of sanctions. Let us recall at least their sale of shares in the Russian oil company TNK-BP in 2013. Alfa-Bank’s beneficiaries received about $ 14 billion for their share in it. With this money, they created an investment fund L1 Enegry in Switzerland, whose goal was to purchase oil and gas assets around the world.
If Alfa-Bank comes under the control of VTB, this will mean further monopolization of the banking sector in Russia, a significant share of which is already controlled by the largest credit institutions with state participation. This means that Russians may face a reduction in deposit rates, an increase in interest on loans and a deterioration in the quality of banking services.
But there is another important point. According to some experts, the "merger" of the two banks will be carried out through the exchange of shares between interested parties. VTB may buy back some stake in Alfa-Bank for money, but Fridman, Aven and other owners can get VTB shares for most of it, which they can then sell or pledge. If the situation develops according to this scenario, then the “locomotive of the people's IPO” led by Andrei Kostin will again fall in price. According to market rules, an absorbing company almost always loses part of its value. But does Kostin and the managers of the sanctioned state bank have anything to do with the market price of his shares? It seems that they consider the Russian government to be the sole owner of VTB, and therefore they will again ask him for money for, frankly, not the most necessary deal. What prevents VTB from occupying Alfa-Bank’s niche right now? And will the experience of a private credit institution, sharpened by a different, market efficiency, be at least somehow useful for a state bank?
The latest news for today indicates that Alfa-Bank may soon sell it. Information on the implementation of a credit institution has been discussed for several months. Alfa Bank can be bought by VTB, the Savings Bank of Russia, Uralsib or another financial institution.
Alfa Bank may be sold to another bank
The reason for the sale may be the difficulty of working with contractors. This banking structure served the majority of Ukrainian politicians whose accounts were frozen. Due to freezing, the credit institution itself suffers first of all. Also, this bank is credited with relations with Firtash, Yanukovych and other criminal figures.
Also, the need to sell the bank may be related to the arrest of one of the shareholders. He was accused by the Federal Bureau of Investigation of having lied about Moscow’s interference in the US presidential election. According to the latest news, today rates and profitability at the time of making deposits have become completely unprofitable. Some analysts and economists are sure that Alfa-Bank may soon merge with VTB.
Experts noted that it is possible to impose sanctions against holders of securities of this bank. Because of this, there is a threat of business separation. In early August, it became known that one of the members of the VTB Board will become the acting chief executive officer of the bank. Vladimir Verkhoshinsky noted that he was pleased to join Alfa-Bank’s top economists. He shared his primary goals with workers. The expert is sure that it is worth doubling the market share and becoming a leader in new technologies.
From August 1, VTB banker should manage Alfa Bank
The banker noted that the credit institution has great potential, a good team, so success is close. He did not rule out the possibility of a merger with Alfa Bank VTB. According to the institution’s work for the first 3 months of 2018, the banking structure takes 5th position in terms of the number of assets (two and a half trillion rubles).
VTB President noted that the 37-year-old banker is a professional and talented leader who will be able to bring Alfa Bank to a new level. He added that he wished his colleague success and believed in him. Verkhoshinsky was employed at VTB 9 years ago. He was in charge of strategic issues, corporate improvement and development. For 4 years he was deputy chairman of the board of the Bank of Moscow (it was VTB who reorganized this structure). After the merger of the Bank of Moscow from VTB, the economist began to deal with the retail business of the state bank. Verkhoshinsky is known as a banker, economist and prudent worker who is well versed in the country's economy.
The latest news today speaks of a malfunction of the mobile phone application from Alfa Bank. Users noticed that the application is buggy, I can’t log into the system. Some customers noted that they could not conduct a transaction from a personal account. It is not the first time that bank customers have experienced malfunctioning of the program and the official website. The management of the structure explained why there were failures, and also reported the elimination of the problem.