Russia's VTB bank secures record $3.1 bn loan

8th July 2011, Comments 0 comments

Russia's second-biggest bank VTB said on Friday it had secured Eastern Europe's largest syndicated loan following its acquisition of shares in the struggling Bank of Moscow.

The state-owned group said the $3.13 billion three-year credit will carry an interest margin of 130 basis points above the LIBOR rate and be financed by nearly 30 global financial institutions including Bank of America Merill Lynch.

It said other lenders include The Bank of Tokyo as well as Britain's Barclays Capital and France's BNP Paribas.

The Russian lender's Deputy Chairman Herbert Moos called the loan "an inspiring achievement" for VTB.

Moos said in a statement: "We highly appreciate the confidence of the international banks in VTB despite the challenging economic environment of this moment."

The news was announced one week after the Bank of Moscow secured the largest bailout in Russia's history through a 395-billion-ruble ($14.2-billion) cash injection that will be partially financed by VTB.

The state group acquired a 46.48-percent stake in the Bank of Moscow earlier this year and is planning to boost that share to 75 percent under the terms of the state-sponsored bailout deal.

The Bank of Moscow has a strong consumer banking network and access to cash flows from Russian utilities payments that made it a prime target for VTB.

But the nation's fifth-biggest bank -- founded by the deposed mayor of Moscow and once a part of the city's vast property empire -- was saddled with heavy bad debts.

The head of one of the state agencies involved in the Bank of Moscow rescue package said last week that about two-thirds of the Moscow bank's loans were either unsecured or issued to offshore organisations.

Many are believed to be linked to real estate projects that collapsed with the global economic downturn in 2008.

© 2011 AFP

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