* Placement could raise 100 bln roubles - 1st Deputy PM
* Move would dilute state's stake by up to 25 pct
* Talks with strategic buyers so far inconclusive
By Katya Golubkova and Alexei Anishchuk
MOSCOW/ST.PETERSBURG, Russia, March 15 VTB
, Russia's No.2 bank, set out plans for a 100 billion
rouble ($3.3 billion) share sale in Moscow, that could signal a
desire to secure sources of funding if talks with sovereign
wealth funds come to nothing.
VTB needs to raise its capital buffer to meet tighter
regulatory requirements and give it freedom to make more loans
to Russian consumers and businesses.
The long-planned share sale will take place via the Moscow
Exchange, VTB Chief Executive Andrei Kostin said on Friday, as
the state-owned bank heeds a government call to promote the
local stock market.
The sale, which is also part of a privatisation drive by
Russia, could reduce the state's 75.5 percent holding in the
bank by up to 25 percent.
Yet VTB faces a formidable task in completing the issue,
which would be the largest ever secondary share sale in Moscow.
The bank finds its path to international markets blocked by
a wariness towards Russia among some overseas investors, while
talks with sovereign wealth funds (SWFs) - such as those based
in the oil-rich Middle East - on a direct stake sale have so far
Three people with direct knowledge of the matter had told
Reuters in February Qatar's sovereign wealth fund had hired UBS
to advise it on a possible $3 billion investment in
Kostin declined to comment on whether any SWFs, including
Qatar's, would support the share issue as anchor investors. But
he said the bank was setting an example for other Russian and
ex-Soviet Union based companies to follow.
"Bank VTB ... plans a wide-scale placement worth tens of
billions of roubles. I think that our example will help other
companies from Russia and (the Commonwealth of Independent
States) to place here (in Moscow)," he told a conference.
VTB's Tier 1 equity ratio stood at 9.3 percent in September
- regarded by some analysts as relatively low given bigger state
rival Sberbank's is over 10 pct - constraining its
capacity to write new loans and prompting the need for the share
Igor Shuvalov, first deputy prime minister, told reporters
in St Petersburg the sale could be done by autumn once all
investors are on board.
"We will do (the additional share placement) when we have a
full pocket of investors ... We think it would be around 100
billion roubles ($3.3 billion)," Shuvalov said. "We don't want
do to it in parts. In principle we can do it by autumn."
Asked whether talks with Qatar had failed, Shuvalov said:
"We work with all potential investors who show interest in the
Sources close to the matter said VTB had approached
investment banks to arrange the offering, but had not awarded
VTB shares were trading at 5.5 kopecks on Friday, bringing
cumulative losses to 60 percent since it first floated on the
stock market in 2007 and to 40 percent since a secondary
offering two years ago.
The Russian state has compensated small-time investors who
lost money on the flotation, but institutions have not received
such favourable treatment and VTB is rated below Sberbank on
many common measures.
The bank trades at a price-to-book value of around 0.9 times
versus Sberbank at 1.4 times, according to brokerage Aton.
VTB also lags its rival on metrics such as return on equity
where Sberbank achieved 23.8 percent in the third quarter while
VTB delivered 16.2 percent, and in terms of their cost-to-income
ratio, where Sberbank's stood at 47.3 percent against VTB's 49.4
VTB's mistakes such as its value-destructive acquisition
of Bank of Moscow in 2011 have also damaged it in some