Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Russian pension fund Budushchee up for sale after bank bailouts: sources

Published 23/03/2018, 15:34
© Reuters. FILE PHOTO: Entrepreneur and founder of the Museum of Russian Impressionism Mints talks to media in Moscow
SBER
-
CBOM
-

By Tatiana Voronova, Olga Sichkar and Darya Korsunskaya

MOSCOW (Reuters) - Russian businessman Boris Mints wants to sell the country's third-largest pension fund, Budushchee, after two banks in its portfolio were bailed out, potentially triggering up to $370 million in losses, five people familiar with the matter said.

Under pressure from financial and economic sanctions imposed by the West over the annexation of Crimea and support for rebels in eastern Ukraine, Russia shut more than 50 banks and rescued three major lenders in 2017 alone, sending ripples across the country's financial system.

The Budushchee pension fund, which manages the savings of more than 4.5 million people worth 300 billion roubles (3.73 billion pounds), had stakes in two of the rescued lenders - Otkritie Bank and Promsvyazbank (PSB).

Mints, one of Russia's wealthiest businessmen, controls the Budushchee financial group of which the private pension fund is a part.

Official representatives of Mints did not immediately reply to a Reuters request for a comment on the efforts to sell. But the sources said he was under increasing pressure.

"They're are looking for a buyer, that's for sure," said a source close to the Budushchee financial group. A source close to the pension fund also confirmed the plans.

Several potential buyers have held talks with senior executives at Budushchee, said a third source, who is close to Mints. They include Gazfond-PN pension fund, Credit Bank of Moscow (MM:CBOM) and state bank Sberbank (MM:SBER), the source said.

Sberbank said in an emailed comment that "currently no such deal is being planned." A source close to the bank said it was approached by the Mints team on a possible purchase but decided against the deal.

A co-owner of Credit Bank of Moscow, Roman Avdeev, declined to comment. Gazfond-PN did not reply to a request for comment.

LOSSES

Budushchee wrote off its 4 percent stake in Otkritie after the central bank took over the lender last year. Budushchee has said in the past that it could lose around 12 billion roubles if the stake was written off.

In the case of PSB, Budushchee sold its 10 percent stake in the lender in December a day before the central bank announced it was bailing it out.

The sale triggered a lawsuit against Budushchee by the new management of PSB, appointed by the central bank as part of the rescue. PSB is seeking to reverse the deal and seeks damages of 8.3 billion roubles.

The claim would bring current and potential losses for Budushchee from the two bailouts to more than 20 billion roubles, or some $366 million.

"The external pressure is forcing (Mints) to look for someone who will take over (the fund) for some money," said the source close to Mints.

The fund has informed the central bank about a possible ownership change, said a banker who learned about it from the central bank.

The central bank declined to comment, saying that it does not comment on the activities of pension funds or on specific deals.

Mints, 59, was chairman of the board at Otkritie Bank between 2004 and 2013 and later launched a pension vehicle, buying and merging smaller pensions funds that took in the savings of postal workers, steelmakers and railroad workers.

The sources gave no details on the possible price tag for Budushchee, which means "the future" in Russian.

Sergei Okolesnov, director general at consultancy firm Pension Partner, said the two most recent deals involving the purchase of private pension funds, Raiffeisen and Uralsib, valued them at 20 percent of the amount of assets held.

© Reuters. FILE PHOTO: Entrepreneur and founder of the Museum of Russian Impressionism Mints talks to media in Moscow

However, stricter regulatory requirements on the type of assets the funds can invest in as well as declining market yields could weigh on the price of future deals, he said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.