By Atom Markarian
Russia expanded its economic foothold in Armenia on Wednesday as its main state-owned commercial bank formalized the purchase of a leading Armenian credit institution.
Vneshtorgbank, one of the biggest in Russia, paid an undisclosed sum for a commanding 70 percent stake in the Armenian Savings Bank in a deal heralding its aggressive expansion into former Soviet republics. Speaking at the signing ceremony in Yerevan, its chief executive, Andrei Kostin, said the takeover was approved by the Armenian and Russian governments.
That approval was underscored by the presence at the ceremony of Defense Minister Serzh Sarkisian, who co-chairs a Russian-Armenian intergovernmental commission on economic cooperation. Sarkisian is also believed to have close ties with Mikhail Baghdasarov, the previous owner of the Armenian Savings Bank. Baghdasarov’s Mika Limited group is a leading importer of fuel to Armenia. It retained the remaining 30 percent of the sold bank’s shares.
“We have many branches in Europe, but this is our first acquisition in the entire post-Soviet area,” Kostin said, announcing plans to set up subsidiary banks in countries like Ukraine, Belarus and Kazakhstan.
Citing Baghdasarov, Russia’s official Itar-Tass news agency reported this week that the Savings Bank has approached a major Georgian bank with a takeover proposal. The deal, if it goes through, will presumably be underwritten by its new Russian owner.
Kostin listed Armenia’s robust economic growth and the presence on its territory of Russian energy giants like Gazprom and the Unified Energy Systems (UES) as the main motives for the purchase. He indicated that the latter will be Vneshtorgbank’s biggest clients in Armenia.
Gazprom is Armenia’s exclusive supplier of natural gas and holds a 45 percent share in its gas distribution network. UES, for its part, became last year the owner of the country’s largest thermal power plant and took over the Metsamor nuclear station’s financial management as a result of Russian-Armenian equities-for-debt agreements.
Baghdasarov said Russia’s foray into the Armenian financial sector should not be cause for concern. “One should not worry because the bank remains in Armenia and money will come to Armenia,” he said. “Armenia benefits a lot from this deal.”
With more than a hundred branches, the Savings Bank boasts the biggest network of offices in Armenia -- a reason why it exclusively collects and processes utility payments by the population. However, its total capital of 2.65 billion drams ($4.66 million) is rather small even by Armenian standards.
Vneshtorgbank, which was set up in 1990 to finance export-import operations, is incomparably bigger, with a capital exceeding $2 billion and aggregate assets worth $9 billion.