EBRD reportedly raises its stake in Moldova’s Victoriabank to 27.56%

By bne IntelliNews May 31, 2016

Alpha Bank Romania has agreed to sell its 12.5% stake in Moldova’s Victoriabank to the European Bank for Reconstruction and Development (EBRD), infotag.md news agency reported on May 30, quoting unofficial sources. The deal will raise the EBRD's stake in Moldova’s third largest bank to 27.56%.

EBRD has been saying since early 2015 that it plans to raise its shareholding in the bank to a majority and restore corporate governance, but has complained that it was being blocked by political forces protecting corporate raiders. In January 2016, the bank confirmed it was ready to invest the required amount as additional equity, and may invest more depending on market developments.

Other shareholders in the bank, including management board members Galina Proidisvet (13.81%) and Victor Turcan (10.45%), could sell their stakes to the EBRD as well, the source said.

The largest shareholder of the bank is Cyprus-registered Insidown limited liability firm, with 39.2%. Victoriabank announced in December that the final beneficiary of the 39.2% stake is Sergey Lobanov – a Russian investor who is developing Arsenal insurance group. Previously, the declared beneficiary was a German dentist, Paul Fischer.

The EBRD paid MDL90 per Victoriabank share in the recent transaction, unofficial sources quoted by infotag.md reported. At this price, the 12.5% stake is worth MDL281mn (€12.5mn). The highest price seen ever on the market for Victoriabank’s shares was around MDL55, infotag.md commented.

Technically, Alpha Bank contributed the shares to the capital of the investment vehicle VB Investment Holding B.V. registered in the Netherlands by the EBRD. The structure of the deal was aimed at bypassing the local stock exchange, which would have allowed other interested buyers to take over the 12.5% stake by paying a higher price.

The EBRD’s takeover of the 12.5% stake was legally possible after the government reversed an amendment to legislation, again allowing deals bypassing the stock exchange to take place.

In April 2015, the government changed the law to forbid the contribution of Moldovan banks as capital in third-party companies (special purpose vehicles). The regulations, passed the same month, blocked the EBRD's plans “in what appears a deliberate and cynical move,” the bank said in June 2015 in a letter leaked to the local media. Later in the year, the government reversed the amendment to the law.

Separately, the EBRD succeeded in October in changing the supervisory board of Victoriabank, which had been previously taken over by corporate raiders. An extraordinary meeting of shareholders called by the EBRD elected a new supervisory board by cumulative voting. The new board has the power to replace the management board. Shareholders of Victoriabank had lost formal control over the bank’s management the previous autumn.

Victoriabank was “raided” – the term used in the former USSR for a fully or partly illegal attempt to take over a company – by groups planning to take control of the bank, the head of the board of directors Turcan warned in September 2014, pointing to suspicious overnight court decisions that blocked shareholder control. Chief executive Natalia Politov-Cangas used the court decisions to have her mandate renewed last autumn against the will of shareholders.

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