The Government Bails Out the Rich in Russia, Auto Industry

On the same day that U.S. President Barack Obama was gallivanting around Moscow chitchatting with Russian political opposition members and students, Prime Minister Vladimir Putin had a real serious meeting with RusAl owner Oleg Deripaska.

In the end, Deripaska’s GAZ automobile factory received 20 billion rubles in state guarantees the very next day — without any discussion in the State Duma or public, of course. No explanation was given as to how Deripaska plans to save the ailing GAZ plant or what measures he was required to take in exchange for the state aid. All that is known is that no changes with the owners or managers are anticipated.

Everywhere else in the world, an owner who makes a critically flawed business decision loses ownership of his company. In Russia, oligarchs who don’t pay their debts receive state support.

Until January 2007, the Russian government held a 99.9% stake in VTB. Thereupon, at the World Economic Forum, in Davos, its CEO announced that the government would retain a 50% + 1 share and privatize the rest of company shares. At present the government owns 77.47% of the bank via the Federal Property Agency.

During the Bank’s IPO in May 2007, 22.5% of  VTB shares were placed among Russian and international investors. The total amount of funds raised approximated USD 8 billion, making VTB’s IPO the largest public offering in Europe in 2007. It also proved to be truly public IPO in the history of the Russian stock market, since it resulted in more than 120 thousand Russians becoming VTB shareholders.

...As of 1 January 2009, VTB’s equity capital amounted to RUB 397 billion, and net assets equaled RUB 2551 billion.

The shareholders decided to pay 2008 dividends of 0.000447 rubles per share for each VTB ...

• number of shares – 9,000,000,000,000 (Nine trillion);
• nominal price – RUR 0.01 per share;
• form of payment–Russian Rubles.

On 2007-12-06, Oleg Zhukovsky, a senior manager at VTB, was found dead in the swimming pool with a gunshot wound of his dacha outside Moscow. A murder investigation is underway. Another top specialist, Alexander Funin, was found dead on December 27, 2007.

Vadim Levin, who has been First Deputy President of JSC VTB Bank since 2002, has decided to leave the Bank for personal reasons.

Andrei Kostin, VTB President and CEO said: “Over his years of service with the Bank, Vadim Levin has made a very significant contribution to the development of VTB Group’s business. We respect his decision and we wish him all the best”.