Belarus ready to start sale of state-run banks

By bne IntelliNews May 11, 2012

Sergei Kuznetsov in Minsk -

Belarus is ready to embark on the process of selling the country's state-run banks, starting with Paritetbank, the smallest of the four state-owned lenders, the governor of the National Bank of the Republic of Belarus, Nadezhda Ermakova, tells bne.

The deal could be the first of several in the country's banking sector over the next year. VTB (Belarus), the subsidiary of Russia's VTB Bank, wants to buy the 25.9% interest that the Belarusian state currently owns in the lender through state oil and chemistry concern Belneftekhim. Belarus' central bank has also suggested that Russia's VTB Bank sell its Belarus' subsidiary, Moscow-Minsk Bank, to the Belarusian government so it can then merge it with state-owned Belinvestbank to beef up the institution.

Ermakova says that Paritetbank, a medium-sized bank on the list of Belarus' 32 banks, will be sold in a tender. "The tender will be held in the middle of 2012 or during the second half of the year," she says.

Ermakova says several contenders have already having expressed an interest in buying Paritetbank, with one of them being Poland's Getin Holding, which bought Belarusian Sombelbank in 2008. "We received a letter from the holding [Getin], in which it expresses its interest in acquiring Paritetbank and says that it is ready to make its bid in the tender," she says.

Getin, controlled by Polish businessman Leszek Czarniecki, controls financial firms across Central and Eastern Europe, in Poland, Romania, Russia, Belarus and Ukraine.

Hopefully for the cash-strapped Belarusian state, this attempt to sell Paritetbank will be more successful than its first. In 2008, Moscow Bank for Reconstruction and Development (now called MTS Bank), which is controlled by Russian holding company AFK Sistema, announced its firm intention to buy the Belarusian lender. However, this transaction was not completed for reasons that have still not been disclosed.

Sergei Dubkov, the deputy governor of the central bank, told bne in an interview in February that the strategic objective of the Belarusian regulator remained unchanged - to bring in a strategic investor to Paritetbank. "A strategic investor must have banking as its core business and provide technology and capital," Dubkov explained.

The sale of Paritetbank would point to a restart of the Belarusian government's stalled privatisation effort. Last year's economic meltdown in Belarus amid a serious shortage of hard currency reserves indicated that the government would have to step up its privatisation efforts. But since the sale of a 50% stake in Beltransgaz to Russian gas giant Gazprom for $2.5bn in November, the government's plans for the privatisation of major state-owned enterprises remain unclear, with signs that President Alexander Lukashenko had personally intervened to halt the process.

The annual privatisation of $2.5bn worth of state assets in 2011-13 is one of the conditions that the Belarus government agreed to as part of the $3bn loan from the Eurasian Economic Community (EurAsEC). The privatisation proceeds are expected to be channelled to the country's international reserves alongside the loan.

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