Defense state bank PSB agreed to buy SMP Bank from the Rotenbergs

The purchase of SMP Bank, which specializes in corporate lending, by the defense Promsvyazbank may be announced before the end of the year,RBC sources say

Promsvyazbank (PSB), a backbone for the Russian defense sector, has agreed to buy SMP Bank, whose main shareholders are Arkady and Boris Rotenberg. RBC was told about this by an interlocutor close to one of the parties to the transaction. The information was confirmed by a federal official (PSB belongs to the government). According to them, the deal may be announced in the remaining days before the end of the year.

The interlocutors of RBC did not name the amount of the purchase. As Deputy Finance Minister Alexei Moiseev said in an interview with RBC, in early September 2022, negotiations were underway around the assessment and mechanism of the transaction. “Given that SMP Bank also includes Mosoblbank [undergoing reorganization since 2014], the deal is more complicated. But nevertheless, work is underway on it, ”said Moiseev. In December, he said that PSB could close the deal to buy SMP Bank before the end of 2022.

The Ministry of Finance spoke about the negotiations on the accession of the Rotenberg Bank to PSB Finance

The fact that Promsvyazbank can buy SMP Bank was reported by Kommersant in June 2022, citing sources in the financial market. According to them, the parties began discussing the deal back in December 2021, and at the beginning of this year, Promsvyazbank conducted a due diligence procedure for SMP Bank. The procedure includes an assessment of investment risks, an assessment of the investment object, a study of the company's activities, an examination of its financial condition and market position.

Both Promsvyazbank and SMP Bank are under blocking sanctions from Western countries, including those on the US SDN list. Blocking sanctions against SMP Bank were introduced by the United States and the European Union back in 2014 after Crimea became part of RUSSIA. Promsvyazbank came under US sanctions on February 22 this year, after Russia recognized the independence of the DNR and LNR. Later, he was included in the EU sanctions lists, and also disconnected from the SWIFT system. Such sanctions mean the freezing of bank assets in the US and the EU and the impossibility of transactions in dollars and euros.

Promsvyazbank made money in the DNR and LNR Finance

PSB is a systemically important bank and at the beginning of February 2022 was in seventh place in terms of capital among Russian banks (354.4 billion rubles). In 2019, PSB bought Svyaz-Bank from the state corporation VEB.RF, and in 2020 it acquired the subsidiary bank of the same name from the Roscosmos corporation. By the end of May 2023, PSB must also join the Ministry of Finance.

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SMP Bank is a large bank with a focus on corporate lending. As of the beginning of February 2022, the bank ranked 20th in terms of assets among Russian credit institutions (703 billion rubles) and 28th in terms of capital (54 billion rubles).

RBC sent requests to Promsvyazbank, SMP Bank and the Ministry of Finance.