Partners and shareholders

Gazprombank sees a future with Gazprom for ten years ahead

The relations between the top management of Gazprombank and the financial and economic block of Gazprom, which are considered quite complex, did not prevent the bank and the monopoly from signing an agreement to maintain a strategic partnership for the next ten years. Moreover, as Aleksey Matveev, deputy chairman of the board of Gazprombank, said yesterday, at the November 15 meeting of the board of directors of the credit institution, a long-term incentive program for senior management was approved through the purchase of options on bank shares, according to which, for three years, board members will have the right to annually acquire 1% of Gazprombank shares . Thus, the bank is trying to plan its future for a very distant future. Until now, this has not been possible: the plans of the credit institution often change; it is worth recalling at least the history of the purchase of an additional issue of Gazprombank shares by the German Dresdner Bank, which was announced, but never took place.

Gazprombank may have new minority shareholders among its managers within a year. As Mr. Matveev explained, this will become possible after the bank is re-registered from a closed joint stock company to an open joint stock company. “Technically, it is very difficult to sell a minority stake in a closed joint stock company. We have already stated that we are ready to become an open joint stock company next year. And then the top management will be able to be a shareholder of the bank,” said Mr. Matveev.

Board members will purchase shares at the additional issue price, which was approved in October. As you know, the entire issue of shares worth 34.6 billion rubles. bought by Gazfond, a wholly owned subsidiary of Gazprom. As a result, the share of Gazfond will be 49.9%, Gazprom will be 41.7%, New Financial Technologies LLC, another wholly owned subsidiary of the concern, will be 8.4%. As Mr. Matveev said yesterday, the block of shares that the management of the credit institution can claim has already been accumulated by a company with 100 percent participation of Gazprom. Mr. Matveev did not disclose the name of this structure. However, among the bank’s shareholders, only New Financial Technologies is such a “daughter”.

Bank managers will be able to buy shares only “if the bank annually meets established performance indicators.” As Mr. Matveev explained, this means return on capital and high ratings from international rating agencies. The total cost of the acquired shares will be $115 million.

In addition to the members of the board, who will receive 3% of Gazprombank shares over three years, its other managers may also become minority shareholders. They will be able to do this with the help of the bank employees' corporatization fund, to which a portion of the proceeds is transferred. In other words, management can use not only personal money, but also funds from the fund to purchase shares. “If the bank operates effectively within three years, more than 150 managers can become owners of a five percent stake in its shares,” says an official statement from Gazprombank. “This program is aimed at ensuring the long-term development of the bank and the growth of its capitalization.”

According to Interfax-CEA General Director Mikhail Matovnikov, the option to purchase shares by the bank's management is a fairly common practice in large companies that are either already public or are just preparing for an IPO. “This is an excellent incentive for management to continue to work to increase the bank’s capitalization, especially in anticipation of the initial public offering of its shares,” he says. -- With such a small stake, top management, being a shareholder, will not be able to significantly influence the policy of the credit institution. But the right to become an owner is a kind of insurance against losing top management during preparation for key transactions, in particular an IPO.”

As you know, the bank plans to conduct an initial placement in the fall of next year, but first it needs to obtain the consent of Gazprom’s board of directors. The state monopoly has not yet officially considered this issue. The bank's top management has repeatedly spoken about its intention to become its co-owner, but the concern was not too keen to see Gazprombank executives among the minority shareholders. Mr. Matveev yesterday did not go into details of the program, but made it clear that any member of the board of Gazprombank will be obliged to sell his stake if he leaves the credit institution.

Natalia ROMANOVA