Russia chooses domestic investment banks to organize privatizations

MOSCOW - Reuters

Russia’s Economy Ministry has chosen three domestic investment banks to organize the privatization of large state companies this year, it said on April 4.

It chose VTB Capital to arrange the privatization of oil company Bashneft, Sberbank CIB for the privatization of diamond miner Alrosa and Renaissance Broker for the privatization of VTB Bank, it said in a statement.

Russia plans to sell stakes in a number of state-controlled entities which should help it to keep the budget deficit within 3 percent of gross domestic product this year if the oil price stays at $40 per barrel in 2016 as an average.

The economy ministry had sent a request for proposals to Russian and foreign banks for advisory roles in the sales of a 50.08 percent stake in Bashneft and 10.9 percent stakes in both diamond miner Alrosa and lender VTB.

Sources told Reuters last week that Swiss banks UBS and Credit Suisse had been interested in advising on the deals as long as they did not violate sanctions. One of the sources said Italy’s UniCredit had also been interested.

Western investment banks with Russian operations have been reluctant to advise Moscow on the privatizations as they are worried about the consequences of violating sanctions imposed on Russia over the Ukraine conflict.

The government will make a final decision on the banks, based on the economy ministry’s proposals.