The FINANCIAL — VTB Bank Georgia announced losses at 27.4 million lari in the 3rd quarter of 2008, Sarke news agency reported. Bank accounts for 73.4% of the banking sector total losses (37.34 million lari), fixed in the accounting period, agency said.
VTB Bank Georgia is the member of Russia's second largest bank, VTB.
VTB applied to state-controlled national development bank, Vnesheconombank, for a loan to refinance its $11.4 billion foreign liabilities in 2008-2009, VTB CEO Andrei Kostin has said.
Vnesheconombank (VEB) has been granted $50 billion from the country's international reserves to extend loans to Russian companies and banks to help them meet their foreign liabilities amid the ongoing global financial crisis.
"Until the end of this year, we need to repay around $2.4 billion in foreign loans. I don't think that we will raise money on public capital markets this year, and therefore we have turned to VEB for debt refinancing," Kostin told Ria novosti
The VTB chief executive said the bank also had to repay around $9 billion in 2009 and planned to use international loans and VEB's funds to repay its foreign liabilities.
The current global credit crunch started in the United States and quickly spread to Asia and Europe, leading to record losses on Russia's financial markets, rising interest rates, and a liquidity shortage.
Kostin also said that the VTB management board would soon consider cutting the bank's expenditures by 15-20% in the fourth quarter of 2008 and freezing them in 2009.
"So far, we have no plans to lay off staff, but we will not take any new staff on. We are also freezing expenditures, for example, spending on real estate," Kostin said.
Problems in Georgia deepened during the 5 days war between Russia and Georgia.
“VTB Bank conducted important reforms last year to improve financial status and management. It is noteworthy that in August VTB increased its capital. I think that the bank will continue normal operations and develop its services in Georgia,” the President of NBG told The FINANCIAL.
“Georgia will not attempt to re-nationalize assets owned by Russian companies such as UES, Vimpelcom or VTB following its conflict with Russia,” the Georgian Deputy Prime Minister Giorgi Baramidze told mergermarket, according to the Financial Times.
VTB issued loans worth more than 68.8 billion rubles ($2.6 billion) in the last week of October, Russia's second-largest bank said in a statement on Friday.
VTB lent 10.5 billion rubles ($395.6 million) to transportation and mechanical engineering plants, 33 billion rubles ($1.24 billion) to ferrous and non-ferrous metals companies, 1.3 billion rubles ($49 million) to federal and regional government departments, and more than 24 billion rubles ($904 million) to companies in other sectors.
The bank also said it could grant another 24 billion rubles ($904.3 million) in loans, and is also considering lending a total of 18 billion rubles ($678 million) to large retailers, Ria novosti reported.
