Michael Calvey will not feed the bank Vostocny

The fund returns to investors 5 billion rubles collected for the additional issue of bank shares.
17.12.2019
Vedomosti
Origin source
Baring Vostok funds, which have invested over $ 320 million in the development of Vostochny Bank for nine years, will no longer do so. Baring Vostok begins the procedure of returning 5 billion rubles to international investors, which the funds raised specifically for an additional issue as part of the Vostochny financial recovery plan, a representative of Baring Vostok said. Additional issue of 5 billion rubles. was agreed with the Central Bank and planned for 2018, however, its terms were postponed at first, and then the court, at the request of another bank shareholder - Finvizhn Artyom Avetisyan - forbade it to be held.

Baring through Cypriot Evison controlled 51.6% of Vostochny, Finvizhn - 32%. In June, by a court decision, Evison exercised the option and sold almost 10% of the shares of Finvision Bank. Control over the bank passed to Avetisyan and his partners Sherzod Yusupov and Yuri Danilov. Yusupov’s statement to the FSB laid the foundation for the Baring Vostok case, in which the founder of the fund, Michael Calvi, and five others were arrested - they are accused of embezzling 2.5 billion rubles from the bank.

The fund continues to believe in the potential of the bank’s retail business model, which keeps it afloat, in contrast to unprofitable corporate loans, says a Baring spokesman. However, the fund will nevertheless return money to investors for the additional issue: “due to the raider seizure of the bank, the expiration of the agreed terms and the injunction on the issue.” Further investments in the bank at the moment due to the loss of control and the complete lack of access to operational management are impossible, he said.

5 billion rubles. were attracted among investors of the fifth Baring fund to support the bank at the end of 2018 and deposited in a special account, a certificate of which was provided to the Central Bank, which then agreed on a financial recovery plan, says a representative of Baring Vostok. However, he continues, the funds remained unclaimed for about a year due to the injunction of the issue and the change of management “delayed by the raiders”.

$ 6.25 million

payment of a coupon for such an amount was canceled by Vostochny Bank on a subordinated loan of $ 125 million, RBC reported. The reasons for this appeared after the Central Bank verification. Based on its results, the regulator indicated that Vostochny’s basic capital adequacy ratio (H1.1) dropped below 5.125% and this went on for more than six days during 30 business days (from May 31 to June 5). In this case, the bank must, within 45 days, either restore the standard or write off perpetual subordinates

The bank does not have a financial recovery plan, which stipulates an obligation to recapitalize, the representative of Vostochny noted, adding that the bank is able to both cover current reserves and increase its capital stock from operating profit.

If Evison redeemed the entire additional issue, its share would increase to 64% (Avetisyan and partners would have 30.8% left). If the shareholders participated in the additional issue in proportion to the new shares, then Avetisyan and partners would have 49.4% versus 45.5% for Evison. If opponents of Baring buy out the entire issue, their share will increase to 69.2%, and the fund will decrease to 25.6%.

Capital "East" is needed. In 2018, the Central Bank, according to the results of the audit, demanded an additional 19.6 billion rubles. reserves, mainly for the corporate portfolio of Uniastrum Bank Avetisyan, in 2017 merged with Vostochny. More than half of Vostochny's portfolio came from two groups of borrowers, the regulator noted. Since September 2018, Vostochny has accrued about 24 billion rubles. reserves, of which more than 20 billion relates to corporate loans of Uniastrum, quoted Baring Vostok. Finvision promised to help the bank: it pledged to redeem assets from it for 2.2 billion rubles. The company representative did not answer whether the assets had already been purchased, and did not comment on Baring's statement. Yusupov did not respond to the request.

This case cannot be compared with others, Fitch analyst Anton Lopatin believes: most likely, the corporate conflict led to delays in the agreed deadlines or non-compliance with any other conditions, which caused the fund to return money to investors.

Apparently, the fund does not see the economic sense of investing in a bank in the face of a conflict and this step seems logical, says Ruslan Korshunov, senior director of bank ratings at Expert RA. “The bank as a whole makes money and can, if necessary, write off eternal subordinates,” he notes. “Without these 5 billion, the bank will most likely not be able to violate the standards, but will have an extremely weak capital reserve.”

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