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Kremlin Transcripts: Putin and Gref discuss Vneshtorgbank IPO

Transcript text from a December 18th cabinet meeting. President Vladimir Putin discusses the privatization of Russia’s second largest bank, Vneshtorgbank (which recently purchased a 5% stake in the defense group EADS), with Economy Minister German Gref. This cabinet meeting comes two days after news that EADS executives “want to get rid of their government shareholders, claiming that political influence is hindering attempts to win business in the United States.”

VLADIMIR PUTIN: Good. What decisions have been made regarding Vneshtorgbank? GERMAN GREF: We plan to discuss the question of an additional initial public offering by Vneshtorgbank at a Government meeting. The plan is to place an issue of additional shares for a total of between 90 billion and 120 billion roubles on the open market. This share issue would have two purposes. First, Vneshtorgbank has acquired banks in the past and a part of this issue would need to be spent on consolidating these banks’ shares into a single Vneshtorgbank share. The other part of the revenue generated by the issue would be used to capitalise the bank in order to ensure its sustainable development and ability to provide credits in the years following 2007. Currently, 99 percent of Vneshtorgbank’s charter capital is in state hands. After the IPO, around 20-22 percent would be placed on the market and the state share would decrease to 78-80 percent. VLADIMIR PUTIN: Which trading floors are you considering for the IPO? GERMAN GREF: We will carry it out on two trading floors. Depending on domestic market capacity part of the issue will be placed on Russia’s domestic market and the other part we plan to place most likely on the London Stock Exchange. VLADIMIR PUTIN: Will Russian citizens be able to buy these shares? GERMAN GREF: Absolutely. We are planning the Vneshtorgbank and Sberbank IPOs in such a way as to make the minimal share price affordable for Russian citizens. Next year, according to preliminary plans, electricity generating companies will also carry out IPOs for a total of around 250 billion roubles and Vneshtorgbank for around 120 billion roubles. The savings bank, Sberbank, is also planning an additional share issue. This will be the biggest issue in a decade. VLADIMIR PUTIN: The Rosneft IPO showed that our citizens are eager to buy liquid securities issued by Russian companies, and Sberbank and Vneshtorgbank are certainly of this number. We need to make it technologically possible to give people the chance to buy these shares. GERMAN GREF: We want to make it a principle of these share issues that in the event of over-subscription priority would go to private individuals. VLADIMIR PUTIN: That’s the right approach.