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VTB: Western companies to participate in Russia’s privatization program if they want

Earlier President Vladimir Putin during a meeting on privatization of state property requested that the new owners of the assets should be in Russian jurisdiction

MOSCOW, February 13. /TASS/. Foreign investors will be allowed to participate in the Russian program of state assets’ privatization, President of Russia’s second-biggest lender VTB Andrey Kostin said in an interview aired by the Rossiya-24 TV news channel on Saturday.

"Obviously biggest western companies, including Germany-based, will participate if they want," he said. "It’s not clear where the roots of this misunderstanding are. Neither President, nor Prime Minister, nor other officials have ever said that foreign companies will have no access to privatization," Kostin added.

"Today localization of production in Russia, investment in Russia and many other issues interesting for German business, including real sector, have been discussed. Of course, privatization is also being considered in this respect as German companies could participate in privatization in a number of sectors in Russia," he said.

On February 1, President Vladimir Putin held a meeting on privatization of state property. President requested that privatization should be transparent and state shares should not be sold at bargain prices. At the same time the new owners of the assets should be in Russian jurisdiction, Putin said.

Earlier Economic Development Minister Aleksey Ulyukayev said Bashneft, Alrosa and Rosneft could be privatized first of all. "Those are public companies that have listings, thus - technically and legally - ready and are known to investors," he said.

Avtovaz financial difficulties

Top management of Russia’s second-biggest lender VTB will meet representatives of the country’s flagship car maker Avtovaz to discuss issues around the latter’s potential financial difficulties, VTP President Andrey Kostin said, adding that there’ve been no delays in debt repayment so far.

Net loss of Avtovaz Group rose almost three-fold in 2015 to 73.851 bln rubles ($932.5 mln). The company breached covenants on more than 43 bln rubles ($542.63 mln) of loans as of December 31 and received waivers from lenders including Rosbank, Garanti Bank Moscow and Societe Generale, it said on Friday.

"Avtovaz has never eluded payment, so we don’t assume any urgent measures now though after the announcement about increase of losses we’ll hold a meeting and ask how (the company plans to) solve the issues," Kostin said in an interview aired by the Rossiya-24 TV news channel.

He added that amid crisis the car sector is traditionally the first to be affected. "Avtovaz problems are not specific… there is nothing unique here. Besides Avtovaz all enterprises in the car sector are not doing well, but both Kamaz, and GAZ and Avtovaz cope with their debt burdens so far," President said.

According to Kostin, construction firms may be the next to be affected by financial difficulties though on the other hand enterprises in the agricultural sector are doing fairly well. "That’s why we don’t witness any substantial deterioration of credit portfolio," he added.

On Friday, Ernst&Young said Avtovaz is at risk of putting on hold operational activities due to large losses and difficulties associated with the repayment of debt.