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VTB Group merges VTB North-West into VTB Bank

18 March 2010

The Supervisory Council of OJSC Bank VTB North-West has resolved to begin the merger of the Bank into JSC VTB Bank. 

This decision supports VTB Group development strategy in Russia announced in 2006.

At the first stage of integration in 2007-2009, retail business was consolidated in VTB24, while VTB was put in charge of corporate business outside the Northwestern Federal District. Moreover, the business networks were split into retail and corporate segments, the number of outlets in the regions of common presence was optimized, and the product line, major systems and business processes were brought to maximal consistency.

The second stage of the amalgamation program that implies legal merger of the two banks is expected to last for about one year and is scheduled to complete before the end of Q1 2011. VTB North-West will be transformed into VTB North-West Regional Center, a structural unit of the Head Office with broad powers. The Regional Center will manage all VTB Group corporate branches in the Northwestern region, including both VTB North-West network and VTB Bank current network with its branches in St.-Petersburg, Kaliningrad, Syktyvkar and Vologda.

VTB North-West Regional Center’s scope of work includes development of customer base and independent business management in the region, as well as broad powers in credit operations and branch network management, with independent fee policy.

VTB North-West is one of the leaders in the region’s corporate segment. As of 1 January 2010, its share in the corporate loan market of the Northwestern Federal District and the Kirov Region exceeded 14.5%, and amounted to 14.8% in the corporate deposit market. The bank’s assets as of 1 January 2010 (under IFRS) attained nearly RUB 250 billion, which accounts for 6.8% of VTB Group total assets.
According to Ekaterina Petelina, member of VTB Management Board, “the merger of VTB North-West will help us build a substantial synergy to achieve more efficient corporate customer relations, enhance business management, cut expenses through removing redundancy and allow shared usage of the infrastructure. According to our estimates, the annual economic benefit from the integration will amount to at least RUB 700 million. Launching the new merger project, we are keeping the promise we gave to our shareholders during the IPO. At the same time, we will ensure a strong focus on maintaining the customer base and service quality”.
Dmitry Olyunin, Chairman of VTB North-West Board, said:  “The basic decision to proceed with the merger was made 4 years ago. Over these years, our integration and interaction with the Head Office have developed so much that we are, in fact, already operating as VTB’s regional center in the Northwestern region. The scope of authority of a regional center will be sufficient to retain the current customer relation processes, including traditionally fast decision-making procedures”.

For reference:

JSC VTB Bank became the major shareholder of OJSC Bank VTB North-West in 2005, when VTB Bank Supervisory Council adopted the program of integrating the Bank’s business into VTB Group. In 2008, following mandatory sale and redemption of VTB North-West shares, JSC VTB Bank acquired a 100 % stake in the Bank. Integration into VTB Group allowed the customers of this St. Petersburg bank to enjoy the advantages of one of the largest Russian banks and get a wider range of world-class financial services.
As of 1 March 2010, VTB North-West branch network comprises 33 outlets (including 17 branches) located in the Northwestern Federal District and the Kirov Region.

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