VTB, as stated by board member Dmitry Pyanov, will make a decision regarding suspended coupon payments on subordinated bonds in rubles, dollars, and euros by the end of 2023. Pyanov emphasized the one-year limitation on coupon payments is crucial. In December 2022, the bank had limited coupon payments for 13 subordinary bonds by 2022 and 2023 with around 24 billion rubles to strengthen the capital position. Pyanov called it a “pro-client” decision since VTB opted to write off subordinated loans instead. The bank might offer a ruble substitute for subordins denominated in euros and dollars by 2023. VTB’s capital decreased by 5.4% over 2022 and had a capital of 1.7 trillion rubles. It plans two additional share issues, with the first being non-monetary and valued at 149 billion rubles, resulting in the Russian Federation’s capital’s share increasing from 60.9% to 76.4%. A second additional issue is expected to be conducted in Q2 2023 and might attract 50-125 billion rubles.
At the end of 2023, VTB will make a decision regarding previously suspended coupon payments on subordinated bonds in all currencies (rubles, dollars, euros), said Dmitry Pyanov, member of the VTB board. According to him, management is focused on ensuring that the limitation on coupon payments remains “one-year”.
In December last year, the bank decided to limit coupon payments at the end of 2022 and 2023 on 13 subordinary issues in the amount of regarding 24 billion rubles. This was done as part of strengthening the capital position. According to Mr. Pyanov, the positive effect on capital from this measure in 2023 will amount to 36 billion rubles.
At the same time, the top manager called such a decision “pro-client”, explaining that the bank had “every chance to write off these subordinated loans due to the breakdown of the write-off triggers (reducing the capital adequacy ratio below the threshold value — “Kommersant”)”. According to him, “this is the deprivation of only one year of the coupon in return for not writing off these subordinated loans.”
At the same time, the bank will have to do something with subordins denominated in dollars (three issues for $450 million) and euros (four issues for €500 million) during 2023, perhaps the bank will offer ruble substitutes, Mr. Pyanov noted. “We, as a sanctions bank, will not be able to live long-term with a subordinary in foreign infrastructure,” he explained.
The capital of VTB Group at the beginning of 2023 amounted to 1.7 trillion rubles, having decreased by 5.4% over 2022. This year, VTB plans two additional share issues. The first was predominantly non-monetary. Its volume amounted to 149 billion rubles, 100 billion rubles. of which were converted from the subordinated deposit of the NWF into VTB ordinary shares. In addition, RNKB shares were invested in the capital (for 48 billion rubles). The remaining amount of 1 billion rubles. minority shareholders have made the right of pre-emption, said Mr. Pyanov. As a result of the additional issue in the first quarter of 2023, the share of the Russian Federation in the capital of VTB increased from 60.9% to 76.4%.
In the second quarter, VTB is going to conduct a second additional issue. As expected, it will be monetary, non-state and carried out by open subscription, the top manager noted. Within its framework, it is possible to attract 50-125 billion rubles, estimates Mr. Pyanov.
For more details, see the material “Kommersant” “VTB reported for the losses of the entire sector.”
In conclusion, VTB’s decision regarding the previously suspended coupon payments on subordinated bonds in all currencies (rubles, dollars, euros) is set to be made at the end of 2023. The positive effect of the decision on the bank’s capital position is estimated to be around 36 billion rubles. The bank’s management is focused on ensuring that the limitation on coupon payments remains for only one year. Moreover, VTB plans two additional share issues in 2023 to strengthen its capital position. The first non-monetary issue was completed in Q1, and the second monetary one is expected to take place in Q2. These measures will help VTB cope with the losses of the entire sector and improve its financial stability.