June 6 (SeeNews) - The European Bank for Reconstruction and Development (EBRD) said on Monday it has bought a 12.5% stake in Moldova’s third-largest lender Victoriabank from Alpha Bank Romania, a subsidiary of Greece's Alpha Bank, for 6 million euro ($6.7 million).
Hence, the EBRD boosted its stake in Victoriabank to 27.5% "in a move to restore effective corporate governance and to ensure Victoriabank’s continued sound financial performance," it said in a statement.
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The stake was bought at a price of 42 Moldovan lei ($2.1/1.92 euro) per share, or half the book value. It is owned by a special purpose vehicle, VB Investment Holding, located outside Moldova, owned and controlled by the EBRD.
"The transaction, which required the reversal of recently adopted prohibitive legislation, is an important step that underlines how crucial it is to preserve Victoriabank as an independent, commercially-oriented and profitable institution with transparent ownership that benefits the Moldovan economy," EBRD's director of financial Institutions for the Western Balkans, Belarus, Moldova and Ukraine, Henry Russell said in the statement.
The EBRD has been seeking a majority stake in Victoriabank for more than a year now, following the suspension of the bank's supervisory board by court orders in September 2014, which created a situation where shareholders, including the EBRD, could not exercise influence over Victoriabank’s corporate governance.
In January 2015, the EBRD received regulatory approval to acquire up to 50% of the shares of Victoriabank.
Last week, Infotag.md reported that two management board members at Victoriabank - Galina Proidisvet, who owns a 13.81% stake in it, and Victor Turcan with a 10.45% ownership - are likely to sell their stakes to the EBRD, quoting a source close to the transaction.
A new seven-member board voted in at Victoriabank's October 2015 extraordinary shareholders meeting, initiated by the EBRD, remains non-functional as three elected board members have not submitted the required documentation for approval by the central bank.
“It falls on Victoriabank’s largest shareholder, Insidown, to ensure that its nominees prepare and submit their documentation. I call on the National Bank to ensure that this is done immediately and in line with good governance principles,” Russell said.
The EBRD invested in Victoriabank in 1995, alongside the bank’s founders. In 2006, the control of the lender's supervisory board passed to non-transparent shareholders, unacceptable to the EBRD.
Lack of shareholder transparency remains a major concern for the Moldovan banking sector and has negative implications for investment and the country’s financial stability, the EBRD noted.
The EBRD – previously a major lender to the Moldovan banking system – has refrained from any new business with banks owned by non-transparent shareholders, lowering its financing to the sector from over 40 million euro in 2010 to just 12.5 million euro in 2015.
Victoriabank's assets reached 12.2 billion lei in 2015, while its net profit reached 303.3 million lei, according to central bank data.
(1 euro=22.2935 lei)
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