Russia's VTB looking to sell 10% of its Angolan unit

FILE PHOTO: Logos are on display outside a branch of VTB bank in Moscow, Russia May 30, 2019. REUTERS/Evgenia Novozhenina/File Photo

SOCHI, Russia (Reuters) - Russia's state-controlled lender VTB VTBR.MM wants to sell a 10% stake in VTB Africa, its Angola-based unit, the bank's chief executive Andrei Kostin said on Wednesday.

The deal, if it happens, would see VTB’s stake decrease to 40%, Kostin said, adding that VTB was looking to sell a part of its stake to the Angolan unit’s management.

“We want to reduce our share in the Angolan bank to 40%, the share of our Angolan partners to 40% and sell (a combined) 20% to the management,” said Kostin.

Currently, VTB owns 50.1% of VTB Africa’s shares, while Antonio Carlos Sumbula, former head of Angolan state-owned diamond firm Endiama, holds 49.87%.

VTB, Russia’s second-largest lender, was hit by sanctions following Moscow’s annexation of Crimea in 2014. The sanctions led many Russian banks to adjust their business plans and, in many cases, reduce their presence abroad.

The bank has been contemplating the sale of a stake of its Angolan unit since May, but Kostin said sanctions were not the only reason behind the decision to sell.

Kostin credited the management team in Angola for their “effective” work and a return on equity of almost 50%, saying they deserve to be motivated more actively.

“They were ready to buy 100% of the bank, but I decided that we need to stay in Angola,” said Kostin. “That is why we found such a format, sufficient for motivation, but leaving us a large holding, in order to influence all major decisions.

“We’ll close the deal by the end of the year.”

Reporting Darya Korsunskaya; writing by Anton Kolodyazhnyy & Alexander Marrow; editing by David Evans and Alexandra Hudson