VTB will join Otkrytie, India is eyeing a stake in Rosneft, the sausage remains without imported casing

VTB Bank will probably be joined by Otkritie and the key RNKB for Crimea

The state duopoly will strengthen in the banking sector of Russia: the second state bank of the country, VTB, will join Otkritie and the RNKB bank, writes Kommersant. The publication learned that VTB head Andrei Kostin approached Prime Minister Mikhail Mishustin with a proposal to create a group of three state banks; the idea has already been approved by President Vladimir Putin and supported by the Central Bank.

• According to Frank Media, the scheme will be similar to the acquisition of a controlling stake in Sberbank : the government will contribute banks to the capital of the VTB Group, having previously purchased Otkritie from the Central Bank. The budget funds spent on this should be fully returned to the budget through the distribution of profits by the Central Bank. The need to consolidate banks subject to blocking sanctions is explained by an increase in capital stability and efficiency of the entire banking sector.
• The state bank, assembled from three sanctioned credit institutions, will remain approximately half the size of Sberbank in terms of assets (23 trillion rubles and 38 trillion rubles) and capital size (2.2 trillion rubles versus 5.2 trillion), not to mention the number of branches. However, such consolidation will consolidate the state’s dominance in the banking sector and will mean the final refusal of the sale of the record-high sanitized Otkritie, which UniCredit had claimed before the “special operation.”
• Both banks are no strangers to VTB: Otkritie is headed by Mikhail Zadornov, who headed VTB24 from 2005 to 2018, and RNKB, before the annexation of Crimea, was a subsidiary of the Bank of Moscow, which was then already part of the VTB group.
• The merger of the country's second state bank, although in an extensive way, will bring it closer to the strategic goal - 30 million clients, or 40% of the economically active population of Russia by 2025. VTB itself had 16 million active clients at the end of last year, Otkritie and RNKB have a total of more than 5 million. In addition, a large federal bank, even if it is under US blocking sanctions, will “automatically” enter Crimea - depending on the desirability of this Putin directly stated a month ago.
• In the current situation, the merger appears justified, say experts interviewed by the publication: it will be possible to close duplicate branches, optimize management and line personnel, and also consolidate future government support. The strengthened VTB will retain its role as a systemic counterweight to Sberbank. The problem with this logic lies within the boundaries of consolidation - in such a paradigm, it would be logical to merge with VTB, for example, Alfa Bank, which fell under the same sanctions.

THE BELL PARTNERS

Six lessons in money management during a crisis

Tasks that until now were completely routine for bankers working with wealthy clients - for example, payments for the maintenance of foreign real estate and education of children or replenishment of foreign cards - now no longer seem so ordinary, says Elena Portnyagina, head of Loko-Bank Private Banking ". Wealthy Russians were among the first to experience the new reality of the financial market. What lessons can be learned from the experience of going through a stressful situation? We understand the partner material of The Bell and Loko-Bank

Indian companies may replace BP in Rosneft

According to Reuters, the Indian government has asked the country's oil companies to evaluate the possibility of buying out BP's share in Rosneft (19.75%) and ExxonMobil's share in the Sakhalin-1 project (30%). In the first case, these are six Indian companies with state participation, including the main buyers of Russian oil ONGC Videsh and Indian Oil, in the second - OVL, which already has 20% in the Far Eastern project.

The companies were more than cautious about the idea, the publication’s sources say. On the one hand, they are counting on a large discount under the sanctions, on the other hand, they are afraid that they will still not receive guaranteed supplies for their investments. Shipping Russian oil to India is already not easy: Reuters also learned that Indian refineries did not participate in Rosneft’s tender for 6.5 million tons with delivery in May-June due to its conditions - full prepayment in rubles.

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What else happened

• Russia reduced oil production in April by 9% compared to March, Kommersant learned . The largest drop, by 20%, was at Rosneft; a drop of 10% was noted at Sakhalin-1. Of the large companies, only Lukoil, which has a refinery in Europe and its own oil trader, has not reduced production. Recently, oil production statistics in Russia have ceased to be public. But it is characteristic that the figures correlate well with satellite data (light from associated gas flares in fields), which showed a 10% drop in production.
• The sanctions exposed another bottleneck of the Russian market - casings for sausage products: 73% of them were imported from Europe, Russian production is also based on imported raw materials. Natural casings are not possible for all sausages, so in the next few months, until a replacement is found, a noticeable reduction in the range is possible.
• The third largest British hotel operator in terms of number of rooms, InterContinental Hotel Group (Holiday Inn, InterContinental, Crowne Plaza), is agreeing to leave Russia. This is the first company of this level to leave entirely, rather than part with individual hotels. No one in Russia is capable of taking over all of its assets, market participants say, which means that the network with its own quality standards will break up into fragments under the control of individual owners, franchisees and operators.
• Apple's quarterly performance was one of the best in the company's long history (revenue of $97.3 billion), but its stock still fell 4%. The reason is the forecast for a decline in sales of $4–8 billion in the current quarter due to the pandemic in China and logistics problems.
• Big tech Amazon, which completed its reporting week, showed its first quarterly loss since 2015; its quotes fell by 10%. Revenue growth of only 7% (which the company explained by the pandemic and Ukraine) was perceived by investors as stagnation. The company's large (18%) stake in the electric vehicle manufacturer Rivian is to blame for the loss ($3.8 billion) - Amazon was forced to record its impairment by $7.6 billion.