Bank of Moscow

Bank of Moscow

Native name	Банк Москвы
Traded as	MSKB@RU
Industry	finance
Fate	merged
Successor	VTB Bank
Founded	2016 (2016)
Defunct	May 10, 2016 (2016-05-10)
Headquarters	Moscow, Russia
Number of locations	42 branches in Moscow and Moscow region and 43 branches in major cities of Russia
Area served	Russia
Key people	Andrei Kostin (Chairman)
Services	banking
AUM	RUB 669 bln
Total assets	RUB 958 bln
Total equity	121,6 billion rubles. (2009, IFRS )
Number of employees	10504 (30 September 2009)
Website	www.bm.ru/en

The Bank of Moscow (Банк Москвы) was a Russian bank that provided banking services to both corporate and retail customers until May 2016.^[1] Headquartered in Moscow, the bank had 267 outlets, including branch offices and cash desks. BoM had over 114,000 corporate and 9 million retail customers. In 2011 it was the fifth largest bank in Russia.^[2] As of 1 July 2016, it had 6.3 million banking cards in its portfolio. Its central office was located in the building of the Moscow International Bank in Moscow, on the corner of Kuznetsky Most and Rozhdestvenka streets.

On May 10 2016 its merger into VTB Bank was finalized.^[3]

In 2011, following a hostile takeover by VTB Bank, US$9 billion in fraudulent loans were discovered, and the bank received an unprecedented US$14 billion bailout.^[4] Russia has issued an international arrest warrant for Andrey Borodin for his suspected role in the fraud.^[4]

History

• 1995: The bank was established under the name Moscow Municipal Bank – Bank of Moscow.
• 1999: Estonian Credit Bank enters into a cooperation agreement with the Bank of Moscow, and in 2012 the Bank of Moscow becomes its biggest shareholder.
• 2004: The bank was renamed as Bank of Moscow JSCB.
• 2005: BM Bank (Ukraine) established as BoM’s subsidiary.
• 2009 : Vedomosti newspaper published an article alleging that in the summer of 2009, as most real estate development companies suffered from the economic crisis, Inteco, a developer controlled by Yelena Baturina, the wife of then Moscow Mayor Yury Luzhkov, paid back a RUB 27 billion loan ahead of schedule. According to the newspaper, it was able to do so, among other things, by selling a 58ha land plot in the southwest of Moscow for RUB 13 billion, thus valuing 1 ha of land at RUB 220 million. The land was reportedly acquired by an entity affiliated with the Bank of Moscow. The newspaper even claimed that the purchase was paid for using a BoM loan.
• 2010: Moscow Mayor Yury Luzhkov signs a directive to use municipal funds to support the bank. According to the document, RUB 7.5 billion were allocated from the city budget in 2010 to buy up the bank’s additional share issue.
• 2011: in February–September VTB obtains a controlling 51% stake in BoM.

By February 2011, the Moscow government's 46.48% ownership had been completely sold to VTB Bank. VTB also acquired 25% plus one share of Capital Insurance Group, which had a 17.32% stake in the Bank of Moscow. The total purchase price was 103 billion rubles. Besides VTB, the Russian Alfa Bank,^[5] and Bank Austria, a subsidiary of UniCredit,^[6] declared great interest in buying the Moscow government's stake. The sale was made to VTB (according to the representative of the Moscow mayor's office) because of a higher price offered and the availability of complete documentation, including a permit to purchase from the Russian Federal Antimonopoly Service.^[7] In March 2011, VTB bought shares owned by Credit Suisse (2.77%) and shares owned by a Swiss fund (1.7%),^[8] bringing its stake to a controlling interest of approximately 51%.

In early April 2011, Andrey Borodin and Lev Alaluyev sold their 20.32% stake in Bank of Moscow to Vitaly Yusufov, son of the former Russian Energy Minister Igor Yusufov.^[9] Vitaly Yusofov had borrowed US$1.1 billion from the Bank of Moscow for this acquisition.^[10]

Borodin himself, who by this time had been indicted in absentia for abuse of office, said that the transaction was carried out with a "torn off by hand",^[11] and that the change of leadership at the bank led to the raids.^[12] By the end of September 2011, VTB had acquired more than 80% of the shares of the Bank of Moscow,^[13] buying from Vital Yusufov (20%), and Suleiman Kerimov (3.88%). Shares were also acquired as part of a package of the Metropolitan Insurance Group.^[14]

The media suggested when Borodin left, more than half of the bank's loan portfolio consisted of loans issued to companies affiliated with Borodin. Borodin himself refused to comment on this information.^[15] According to an investigation by the newspaper "Vedomosti", the total amount of loans granted by the bank to companies associated with Borodin was approximately 217 billion rubles, which exceeded the bank's equity. According to the newspaper, a significant part of these loans were used to repay loans which were dubious or not secured by liquid assets,^[16] and later this information was confirmed by an inspection of the Accounts Chamber of the Russian Federation.^[17]

Later, it was announced by VTB that the bank had 380 billion rubles in bad debt.^[14] As a result, in late September 2011 the Deposit Insurance Agency provided a loan for 10 years, amounting to 295 billion rubles. At 0.51% per annum (DIA itself provided the money to the Bank of Russia) to cover the newly formed "holes" in the accounts of the bank.^[18][19]

• 2016: VTB brings its stake in BoM to 100 percent.

Performance

As of 31 December 2014, the assets of the Bank of Moscow amounted to RUB 2,129.1 billion, liabilities were equal to RUB 1,941.5 billion, and equity at RUB 187.6 billion.

Rating

International rating agencies and rankings

• Moody’s Investors Service: Long-term deposit rating;
• Standard & Poors: Long-term deposit rating in local & foreign currencies – BB-, negative outlook;
• Brand Finance valued the BoM brand in February 2011 at USD 842 million and included it in the top 200 of the leading financial brands in the world;
• BoM advanced by 86 positions, from 190th to 104th place, in The Banker ranking of Top 500 Banking Brands for 2012.

Russian rating agencies and rankings

• RETAIL FINANCE AWARDS 2015: best in the Best Creative Solution of the year category;
• Expert RA 2015: top 3 Russian bank in mortgage loans[16]; highest growth in small-business lending portfolio;
• Usabilitylab 2015 ranking: 4th place in a ranking of user-friendly online banks[18]; 2nd in the ranking of mobile banking applications by user friendliness.

Logo

• In 1995-2005, BoM’s logo represented a red M with “The Bank of Moscow” written below it.
• In 2005-2016, BoM’s logo evolved into a bold M reminiscent of the spires on the Moscow Kremlin wall with “The Bank of Moscow” written below it.

References

External links

• bank website
• VTB

50 largest banks in Russia in terms of net assets
In alphabetical order, as of December 2014
Absolut Bank Ak Bars Alfa-Bank Bank of Moscow Bank Saint Petersburg B&N Bank Citibank Credit Bank of Moscow Credit Europe Bank Eastern Express Bank Gazprombank Globexbank Home Credit Bank ING Bank Khanty-Mansiysk bank Otkritie MDM Bank Mosoblbank Moscow Industrial Bank MTS Bank National Bank Trust National Clearing Centre Nordea Novikombank Otkritie FC Bank OTP Bank Petrocommerce Promsvyazbank Raiffeisenbank Renaissance Credit Rosbank Rosevrobank Rosselkhozbank Rossiya Rossiyskiy Kredit Rossiysky Capital Russian Standard Bank Sberbank SMP Bank Sovcombank Sviaz-Bank Tatfondbank Transcapitalbank UniCredit Ural Bank for Reconstruction and Development Uralsib V.Bank Vneshprombank VTB VTB 24 Zenit
Source: Banki.ru