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City of Moscow government values Bank of Moscow at $6.1 billion

The Moscow government has valued the Bank of Moscow at $6.1 billion, as it plans to offload its stake in the bank. The valuation was reported last week, with Interfax news agency carrying the news. According to Interfax news agency’s source, the valuation was based on the average share price during six months to October 1. Bank of Moscow’s capitalization stood at $7.4 billion on Thursday last week, or 217 billion roubles, Reuters data showed.

Bank of Moscow, a top-5 Russian lender in terms of assets, became an acquisition target at the end of the last year after the capital's long-serving former mayor Yuri Luzhkov was sacked by Russian President Dmitri Medvedev. Moscow’s new mayor Sergei Sobyanin is looking at various options for selling the city's 46.5 percent stake in the bank, with VTB expecting to buy control or even 100 per cent of Bank of Moscow in the first half of 2011.

If the deal goes through, VTB shareholders will be meeting in early March, VTB's first deputy CEO Mikhail Kuzovlev will replace Andrei Borodin as the head of Bank of Moscow. Borodin and Lev Alaluyev, a top manager with the bank, control 20.3 per cent of the lender.

Alfa Bank, part of Russian oil-to-telecom tycoon Mikhail Fridman's empire and the country's biggest privately owned lender, has also expressed interest in Bank of Moscow, calling for its disposal via an open tender rather than a closed sale to VTB. Kommersant daily had reported earlier that Bank of Moscow was worth up to 240 billion to 280 billion roubles.

The Bank of Moscow is one of the leading universal commercial banks in the Russian Federation ranking number 5 in terms of assets and capital and in terms of the volume of funds drawn from the population. As of 31 December 2009 the Group’s assets according to IFRS were RUB 825.1 billion, with the gross loan portfolio being RUB 577.8 billion.

The Bank of Moscow was established in 1995 and has since been majority-owned by the city government. Presently the Bank is controlled by the city, which owns 46.48% directly and 17.32% indirectly, through Group of subsidiary companies of Capital Insurance Group.

With 384 offices, the Bank’s branch network covers practically all major economic centers of the country from St Petersburg and Kaliningrad in the West to Vladivostok and Yuzhno-Sakhalinsk in the East.

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