October 4, 2018 / 1:17 PM / 9 months ago

VTB purchase of rival threatened by London lawsuit

LONDON (IFR) - VTB’s acquisition of a rival Russian lender is facing an uncertain future after a group of bondholders asked a London court to freeze the assets of brothers Dmitry and Alexei Ananyev, the oligarchs who are selling their majority stake in Vozrozhdenie Bank to VTB.

The bondholders were wiped out when Promsvyazbank (PSB), another Russian bank that was owned by the brothers, collapsed at the end of last year. The 34 investors bringing the application to freeze the Ananyevs’ assets allege that the brothers misled them and offered false guarantees.

“The claimants were longstanding clients of PSB who purchased worthless fixed-rate loan notes,” their law firm Lipman Karas said in a statement. “The claimants say they were told by senior private banking managers that the brothers were personally backing the notes.”

About US$240m of short-term debt was sold in the months running up to Promsvyazbank’s collapse. The lender was taken over by the Russian government in December after an investigation by the Central Bank of Russia uncovered a capital hole, triggering a default on the notes.

The 34 investors are suing the brothers for the almost US$46m that they collectively lost – some €16.4m in euro-denominated notes and US$26.8m in dollar-denominated notes. Nine investors started proceedings, but they were joined by another 25 investors this week.

The Ananyevs paid €11m and US$15.6m into court a few weeks ago to stop their assets, which include the Vozrozhdenie shares being sold to VTB, from being frozen. But as a result of the 25 investors that were added to the claim this week, they have been asked to post additional money.

One representative for the claimants says that the brothers – through their lawyers – had declined to post additional money. In response, the claimants have applied to have the brothers’ assets frozen. The pair have been given until October 26 to respond to the asset freeze application.

The news will come as a blow to VTB, which is majority owned by the Russian state. Just last week, its board met to approve the purchase of a controlling stake in Vozrozhdenie, which VTB said will strengthen its position in the all-important Moscow region.

According to VTB, Vozrozhdenie has 750,000 retail customers and 53,000 corporate customers. The bank had assets of Rbs235bn (US$3.6bn) at the end of June, according to its latest financial disclosure, and Rbs196bn of customer deposits.

The Ananyevs were ordered to sell their controlling stake in Vozrozhdenie in the weeks following the collapse of Promsvyazbank. The case is being heard in London because the two brothers ultimately owned shares in the two banks through two companies registered in the UK.

Skadden, Arps, Slate, Meagher & Flom, which is understood to be representing Dmitry Ananyev, did not immediately respond to a request for comment. It is unclear who is representing his brother. VTB also did not immediately respond to a request for comment.

The full case against the Ananyevs is scheduled to be heard in February.

Reporting by Gareth Gore

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