Bank of Moscow

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The Bank of Moscow (Closed Joint Stock Company)
Traded as MSKB@RU
Industry Banking
Fate Active
Founded 1995
Headquarters Moscow, Russia, Russia
Number of locations 42 branches in Moscow and Moscow region and 43 branches in major cities of Russia
Area served Russia
Key people Andrei Kostin (Chairman), Mikhail Kuzovlev (chairman)
Services bank accounts, debit and credit cards, safety deposit boxes, financial intermediation, cash and non-cash money transfers, currency exchange, lending and investment services,
AUM RUB 669 bln
Total assets RUB 958 bln
Total equity 121,6 billion rubles. (2009, IFRS )
Employees 10504 (30 September 2009)
Parent VTB
Subsidiaries BM Bank (Kiev, Republic of Ukraine), Bank Moscow-Minsk (Minsk, Republic of Belarus), AS Latvijas Biznesa Banka (Riga, Latvia), AS Eesti Krediidipank (Tallinn, Estonia)
Website www.bm.ru

The Bank of Moscow (Банк Москвы) is the fifth largest bank in Russia,[1] providing banking services to both corporations and individuals. The bank currently provides services to over 100,000 corporate customers and over 7 million citizens. The bank has its offices in nearly each major economic center of the country and has 380 stand-alone outlets which include sub-offices and cash desks.[2] The full name of the company is The Joint-Stock Commercial Bank "Bank of Moscow" (Open Joint Stock Company). The bank's headquarters are located in Moscow. In 2011, following a hostile takeover by VTB Bank, US$9 billion in fraudulent loans were discovered, and the bank received an unprecedented US$14 billion bailout.[3] Russia has issued an international arrest warrant for Andrey Borodin for his suspected role in the fraud.[3]

History[edit]

The Bank of Moscow was originally established in 1995 as a joint-stock commercial bank "Moscow Municipal Bank - Bank of Moscow." In April 2010, Moscow Mayor Yury Luzhkov signed a decree to support the bank's funds from the municipal budget of Moscow. Under this order, the bank should have been allocated 7.5 billion rubles (approximately 247 million US Dollars) for the purchase of additional shares of the bank.[4]

Privatization of the Bank[edit]

As of February 2011, the Moscow government's 46.48% ownership had been completely sold to VTB Bank. VTB also acquired 25% plus one share of Capital Insurance Group, which had a 17.32% stake in the Bank of Moscow. The total purchase price was 103 billion rubles. Besides VTB, the Russian Alfa Bank,[5] and Bank Austria, a subsidiary of UniCredit,[6] declared great interest in buying the Moscow government's stake. The sale was made to VTB (according to the representative of the Moscow mayor's office) because of a higher price offered and the availability of complete documentation, including a permit to purchase from the Russian Federal Antimonopoly Service.[7] In March 2011, VTB bought shares owned by Credit Suisse (2.77%) and shares owned by a Swiss fund (1.7%),[8] bringing its stake to a controlling interest of approximately 51%.

In early April 2011, Andrey Borodin and Lev Alaluyev sold their 20.32% stake in Bank of Moscow to Vitaly Yusufov, son of the former Russian Energy Minister Igor Yusufov.[9] Vitaly Yusofov had borrowed US$1.1 billion from the Bank of Moscow for this acquisition.[10]

Borodin himself, who by this time had been indicted in absentia for abuse of office, said that the transaction was carried out with a "torn off by hand",[11] and that the change of leadership at the bank led to the raids.[12] By the end of September 2011, VTB had acquired more than 80% of the shares of the Bank of Moscow,[13] buying from Vital Yusufov (20%), and Suleiman Kerimov (3.88%). Shares were also acquired as part of a package of the Metropolitan Insurance Group.[14]

The media suggested when Borodin left, more than half of the bank's loan portfolio consisted of loans issued to companies affiliated with Borodin. Borodin himself refused to comment on this information.[15] According to an investigation by the newspaper "Vedomosti", the total amount of loans granted by the bank to companies associated with Borodin was approximately 217 billion rubles, which exceeded the bank's equity. According to the newspaper, a significant part of these loans were used to repay loans which were dubious or not secured by liquid assets,[16] and later this information was confirmed by an inspection of the Accounts Chamber of the Russian Federation.[17]

Later, it was announced by VTB that the bank had 380 billion rubles in bad debt.[14] As a result, in late September 2011 the Deposit Insurance Agency provided a loan for 10 years, amounting to 295 billion rubles. At 0.51% per annum (DIA itself provided the money to the Bank of Russia) to cover the newly formed "holes" in the accounts of the bank.[18][19]

Owners and management[edit]

The main shareholders are VTB (95.52%) and the Capital Insurance Group (1.51%). Total Capitalization at that time amounted to 151.85 billion rubles.[14] Chairman of the board of directors of 24 February 2011 - A L. Kostin. President - Michael Kuzovlev (until 12 April 2011 - Andrey Borodin).[12]

Presence[edit]

The Bank has a presence in almost all the economically important regions of the country and has 380 separate units, including sub-offices. As of 1 January 2012 the bank had 208 branches in Russia, with more than 100 thousand corporate and more than 9 million private customers. The central office is located in a former bank building of the Moscow Inter-Bank in Moscow, at the corner of the Kuznetsk bridge and Rozhdestvenka. There are 141 offices of the bank in Moscow with 474 post and bank offices in the capital region.[20] The network also includes the Bank of Moscow's four subsidiary banks outside Russia: BM Bank (Ukraine), Bank Moscow-Minsk (Belarus), the Estonian Credit Bank (Estonia), and the Bank of Moscow - (Belgrade) ( Serbia). The Bank is also represented in Frankfurt am Main (Germany).

The Bank of Moscow operates its own processing center, serving the bank card program. The bank has issued more than 13 million cards. The processing center is certified by Visa International and MasterCard and has a wide network of ATMs (1.9 thousand units).

Performance[edit]

On 1 March 2011, the assets of the Bank of Moscow amounted to 867.7 billion rubles. Capital, when calculated in accordance with the methodology of the Bank of Russia, is 140 billion rubles.

Rating[edit]

International credit rating agencies assign ratings to the bank:[21]

  • The agency Moody's Investors Service: Long-term deposit rating - Ba2, outlook "stable"
  • The agency Standard & Poors: Long-term deposit rating in local & foreign currencies - BBB, outlook "stable"
  • Brand Finance Agency in February 2011 estimated the brand of the Bank of Moscow to 842 million U.S. dollars and include it in the top 200 leading financial brands in the world [22]

References[edit]

  1. ^ "About the Bank :: Bank of Moscow". Bank of Moscow. Archived from the original on 23 July 2011. Retrieved 8 July 2011. 
  2. ^ "Joint stock commercial bank − Bank of Moscow". Russian Banking and Investing. VTB Group. Retrieved 16 January 2013. 
  3. ^ a b "Russia rescues Bank of Moscow in record bail-out". BBC News. 1 July 2011. Archived from the original on 3 July 2011. Retrieved 3 July 2011. 
  4. ^ a gazeta.ru article on the Bank
  5. ^ "Alfa Bank eyes Bank of Moscow stake - report". Reuters. 24 January 2011. Retrieved 2 May 2012. 
  6. ^ "Bank Austria Bids for Bank of Moscow". FriedlNews. 14 January 2011. Retrieved 2 May 2012. 
  7. ^ A Vendmosti.com article on the transaction
  8. ^ "VTB stake in Bank of Moscow still below controlling interest - official". RIA Novosti. 21 March 2011. Retrieved 7 May 2012. 
  9. ^ Sergei Piatakow (4 March 2011). "Borodin sells Bank of Moscow stake at knock-down price - Vedomosti". RIA Novosti. Retrieved 8 May 2012. 
  10. ^ Marina Sysoyeva (11 April 2011). "Bank of Moscow Stakes Sold to Vitaly Yusufov, Vedomosti Says". Bloomberg. Retrieved 8 May 2012. 
  11. ^ Naila Asker-zade. "Borodin passed the Bank". :ru://Ведомости. Retrieved 11 April 2011. 
  12. ^ a b "Saga of the Bank of Moscow: the end of the chapter". // rian.ru. Retrieved 13 April 2011. 
  13. ^ "Russia's VTB buys 81 pct in BoM, ends long battle". Reuters. 29 September 2011. Retrieved 17 May 2012. 
  14. ^ a b c Gleb Klimentyev. "State Bank of Moscow". // gazeta.ru. Retrieved 30 September 2011. 
  15. ^ Naila Asker-zade. ""In business, you should not trust people," - Andrei Borodin, the former president of Bank of Moscow". // Ведомости, 20 April 2011, № 70 (2836). Retrieved 20 April 2011.  A Russian language page
  16. ^ Svetlana Petrova, Nail Asker-zade. "Borodino panorama". // Ведомости, 15 June 2011, № 107 (2873). Retrieved 15 June 2011.  This page is in Russian
  17. ^ Gleb Klimentyev. "Money for Faith". // gazeta.ru. Retrieved 7 July 2011. 
  18. ^ "Another approach could not be". // Коммерсантъ, № 185 (4726), 4 October 2011. Retrieved 4 October 2011.  (In Russian)
  19. ^ Tatiana Voronova. "Without prejudice to the VTB". // Ведомости, 4 July 2011, № 120 (2886). Retrieved 4 July 2011.  This is a Russian Article
  20. ^ Банке Москвы the bank’s website A Russian page
  21. ^ "Ratings: Bank of Moscow". // bm.ru. Retrieved 16 January 2012. 
  22. ^ BrandFinance® Banking 500 // brandirectory.com

External links[edit]