Russia's number two bank VTB has agreed to raise its stake in the Bank of Moscow to 75 percent from 46.5 percent in order to start baling it out, VTB head Andrei Kostin told reporters on Friday without disclosing who was selling stock to VTB.
"We have achieved an agreement in principle, which would provide us with 75 percent of Bank of Moscow shares, which is a necessary condition for the support," Kostin said.
Next week VTB expects to sign the documents with the Deposit Insurance Agency, which will allocate the central bank's 300 billion ruble bailout to Bank of Moscow, he added.
Bank of Moscow, the capital's investment vehicle under previous Moscow Mayor Yury Luzhkov, has been recently taken over by VTB bank after President Dmitry Medvedev fired Luzhkov over a lack of trust last fall.
A recent check revealed a hole in the bank's assets and it was granted Russia's largest bailout for the banking sector - 400 billion rubles ($14.28 bln), of which 100 billion rubles will be contributed by VTB.
Bank of Moscow's second largest shareholder Russian businessman Vitaly Yusufov has recently asked the central bank to allow him to increase his 19.91 percent share to a blocking stake, Kommersant business daily said. It quoted Yusufov as saying he has not yet received any buyback offers from VTB.
Kostin also said VTB could not have rejected the idea of taking over Bank of Moscow because it had 4.5 million depositors, 9 million retail customers, 140 billion rubles worth of deposits, more than 200 billion rubles of government funds, 100 billion rubles worth of interbank loans and almost 90 billion rubles in external liabilities.
"It was not a hurried decision, but was the only one possible," he said. "For Russia a Bank of Moscow collapse is comparable with the collapse of Lehman Brothers for the global financial system. Neither VTB, nor the state had any other choice but to save this bank, in order to maintain financial stability, the financial sector."