The bank sent a purchase offer to CMD

VTB nevertheless decided to purchase the Central Moscow Depository (CMD), whose license the Federal Service for Financial Markets is going to cancel on February 1. As Kommersant has learned, VTB has sent a proposal to TsMD shareholders to purchase it, the discussion of which will take place today. If the parties agree, the deal could be concluded this year.

A source familiar with the progress of the negotiations told Kommersant that VTB had sent a proposal to CMD shareholders to purchase the company’s business. “This happened on Friday,” he says. “But in any case, the parties are at the preliminary stage of discussion - it is not a fact that the deal will take place at all. There has not even been due diligence of the asset yet.” However, another Kommersant source close to the deal claims that the parties are already discussing its details, in particular the possibility of transferring the payment to VTB in two stages.

“VTB proposes to transfer part of the funds to the sellers immediately after the deal is concluded, and the remaining part after it becomes clear to what extent CMD has retained its business. Discussion of VTB’s proposal will begin on Tuesday,” he told Kommersant. According to him, the maximum transaction amount may be no more than 350 million rubles. If the seller is satisfied with VTB’s offer, the first part of the transaction could be closed this year, says Kommersant’s interlocutor. Another Kommersant source familiar with the situation notes that VTB is mainly interested in acquiring CMD technologies, that is, a register maintenance system, and staff. In this regard, it is possible to sell the second registrar of the TsMD group, the Accounting System, to the bank, he says.

Officially, VTB does not comment on information about the upcoming transaction. CMD representative Arseny Nazarov did not confirm the fact that he had received an offer to purchase the registrar’s business from VTB. "We have received notification from shareholders that they are negotiating the sale of the registrar business," he said. Earlier, Kommersant's sources told that VTB ordered an assessment of the CMD business to its investment division VTB Capital, CMD - Ernst & Young. Arseny Nazarov did not comment on the issue of assessing the registrar’s business.

OJSC TsMD is one of the largest Russian depositories. Operating since 1994. As of December 31, 2009, there were 1,557 issuers servicing, the number of personal accounts was 5.85 million. Revenue in 2009 amounted to 867 million rubles, net profit - 170 million rubles. The shareholders of TsMD are individuals, the main ones being Chairman of the Board of Directors Alexey Korolev (about 85%) and Chairman of the Board Natalia Agafonova (10%).

The Federal Service for Financial Markets (FSFM) decided to cancel the license of the registrar "Central Moscow Depository" on September 9 following a routine audit, which revealed numerous violations. Due to the scale of the registrar’s business, the FFMS made an unprecedented decision to postpone the revocation of the license until February 1, 2011. Before this date, all CMD issuers must have time to transfer their registers to other registrars.

The Central MD filed a complaint against the regulator's decision to the government, but no decision has been made yet. On December 9, CMD filed a lawsuit against the Federal Financial Markets Service to cancel the decision. The CMD court refused to take interim measures. A Kommersant source close to VTB says that if the deal is concluded, the bank will ask the regulator to extend the TsMD license.

To date, CMD has lost almost all of its largest clients. The Fortum company (about 300 thousand shareholders) has not yet made a decision to change the registrar. Yenisei TGC and Kuzbassenergo (each with about 300 thousand shareholders) have not yet chosen a new registrar. In total, as of yesterday, about 120 issuers decided to terminate the agreement with CMD. "Registrar R.O.S.T." remains the leader in attracting ex-clients of CMD. (16 issuers, 984 thousand shareholders), SR-DRAGa (3 issuers, 893 thousand shareholders), Computershare Registrar (8 issuers, 631 thousand shareholders), Status (10 issuers, 468 thousand shareholders), Irkol (1 issuer, about 300 thousand shareholders) and Professional Registration Center (1 issuer, about 300 thousand shareholders).

Elena Kiseleva, Polina Smorodskaya

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