Foreign shareholders left Uralsib

Morgan Stanley and Deutsche Bank withdrew from the shareholders of Uralsib Bank, among which they had been since September 2008. Foreign banks planned to increase the profitability of their investments by participating in the organization of the initial public offering of Uralsib shares on the stock exchange, but the agreement expired, the price of shares fell significantly during the crisis, and the IPO is still in question.

Morgan Stanley and Deutsche Bank have ceased to be shareholders of Uralsib Bank, as follows from its IFRS reporting for 2010. At the end of 2009, each of the banks owned 1.64%; at the end of 2010, their share decreased to zero. Now among the bank’s shareholders there are almost exclusively Uralsib FC structures: 98.25% of the shares are controlled by Nikolai Tsvetkov’s companies. Uralsib, Morgan Stanley and Deutsche Bank banks declined to comment yesterday.

The purchase of 4% of Uralsib by Morgan Stanley and Deutsche Bank became known in mid-September 2008. They bought out half of the stake that previously belonged to the government of Bashkortostan. The government estimated its share at 7.15 billion rubles, which corresponded to the bank’s estimate of 1.7 to capital (according to IFRS data for the six months of 2008). Thus, the package of two investment banks could cost 3.6 billion rubles. The market capitalization of Uralsib last year was approximately $1.36 billion, but in December it increased sharply to $2.3 billion. Thus, by selling the stake before December, based on the market value of the shares, the banks could receive 1.32 billion between them rubles, in December - 2.28 billion.

Under the terms of the 2008 agreements, when banks bought their stakes, they received a mandate for the future IPO of Uralsib, and if it did not take place, they had the right to sell their stakes back at an agreed price, which was not disclosed then. Sources close to the banks said that the exit of investment banks is due to the expiration of a pre-agreed period, during which the IPO did not take place.

Uralsib is not abandoning its plans to place shares on the stock exchange. Moreover, at the end of last year, the bank’s top management stated that attracting a strategic investor on the level of the Italian UniCredit, the Austrian Raiffeisen or an IPO is an inevitable path in light of the strengthening position of state-owned banks. According to Kommersant's information, the bank is actively negotiating with investment banks on this topic.

However, this year an IPO is already unlikely, because Nomos Bank recently floated, and it has gathered potential demand for a private bank of this level, and Uralsib’s business model is similar to the Nomos Bank model, says Roman Koenigsberg, Deputy Director of the Banking Audit Department of FBK. “During the crisis, an IPO was out of the question, but the controlling shareholder may not have had the opportunity to buy back its share,” says Nomos Bank analyst Elena Fedotkova. “Now the bank’s financial condition is improving, and perhaps the buyout initiative came from precisely from Nikolai Tsvetkov."

According to the bank's reporting for 2010, it failed to increase its loan portfolio - it decreased from 216.4 billion rubles. to 206.8 billion. However, the bank showed a significant improvement in the quality of its loan portfolio. The share of problem loans (overdue by more than 90 days) decreased over the year - from 14 to 10% of the portfolio, in the leasing portfolio - from 19.3 to 13.3%. In the retail portfolio, the share of NPL decreased from 10.9 to 9.5%. The reporting also shows a positive trend in related party financing. If in 2009 loans to related parties accounted for 92% of capital (55 billion rubles), then at the end of 2010 this share decreased to 39% (22.4 billion rubles). “However, business with related parties remains significant,” notes Fitch Ratings analyst Vladimir Markelov. “Also, there are many non-core assets on the bank’s balance sheet, the fair value of which is unclear, which negatively affects the quality of capital.”

Yulia Lokshina, Dmitry Ladygin

Organizers of the replacement