Co-owner of Sovcombank called sanctions a pain for shareholders

The inclusion of Sovcombank on the sanctions list deprived shareholders of dividends “for many quarters” in advance, said its co-owner Sergey Khotimsky. But the bank does not need additional capitalization,

Sovcombank, which came under tough blocking sanctions from the United States , the European Union and Great Britain almost immediately after the start of the Russian military operation in Ukraine, will not pay dividends to shareholders for a long period, Sergey Khotimsky, co-owner of the credit institution, told RBC.

“From the point of view of the value of our shares, the possible flow of dividends, we will need to leave profits in the capital for many, many quarters in order not to stop the organic growth of the bank,” the banker said. According to him, Western restrictions primarily hurt the owners.

“Sanctions hurt, but it hurts, first of all, shareholders, and this does not threaten the bank's ability to fulfill the standards and obligations to customers,” Khotimsky emphasized.

The United States imposed sanctions against Otkritie and Sovcombank Economics

Sovcombank, which ranks ninth in RUSSIA in terms of assets (1.99 trillion rubles as of February 1), was included in the United States SDN list on February 24, along with VTB, Otkritie and Novikombank. As a reason, the US Treasury cited the systemic importance of the bank and “financial services activities in Russia”, although in the case of VTB and Otkritie, their affiliation with the state was mentioned, and with Novikombank, they served the Russian defense sector and the owner company Rostec .

Khotimsky did not comment on what could have caused Sovcombank to be included in the sanctions lists. He also did not give an assessment of what losses the credit institution suffered, referring to the recommendations of the Central Bank, but stressed that the bank does not have an urgent need to replenish capital.

“In order to just work, we don’t need critical, so to speak, additional capitalization. Moreover, if the Bank of Russia does not cancel all benefits too quickly, for example, before the end of 2023, then in principle we will be able to grow at a normal pace in the current situation on our own,” the banker said.

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Co-owner of Sovcombank - RBC: "We bought a bank from which the Central Bank did not get out" Finance

The Bank of Russia has not yet given estimates of how much financial support credit institutions may need this year, but two scenarios for additional capitalization are being considered, Elvira Nabiullina, HEAD of the Central Bank, told reporters at the St. Petersburg International Economic Forum.

“It may happen that there is no need for systemic capitalization of banks as a system, that additional capitalization may be required for a small number of banks,” the head of the regulator explained, calling this an “optimistic” scenario. Earlier, the Bank of Russia announced the use of new, previously untested formats for additional capitalization of market participants.

Sovcombank may take advantage of alternative capitalization mechanisms, if such are offered, Khotimsky noted.

“We won’t sell the bank’s shares — we don’t need it, we’re not interested, but if these are some kind of debt instruments, quasi-debt, redemption of preferred shares with a reverse option, subords, then why not,” the banker said.

See also Western reaction to Russian sanctions 04:59