News: Russia's VTB Bank plans corporate branch in India

(BL 03/06/2007) New Delhi - JSC VTB Bank (VTB), Russia's second biggest bank, hopes to start operations in India by opening a corporate branch in the Capital by the year-end. The bank aims to address problems of Russian companies operating in India on issues that arise in their foreign economic activities.

Dr Yuri Yakovlev, VTB's representative in India since 2005, told Business Line, "We are in the process of completing the application process, which should be over by the month-end and then we plan to submit it to the Reserve Bank of India. It might take another four to five months for us to get the requisite permission to begin operations."

The Russian bank has had initial talks with the RBI officials and Dr Yakovlev said that all the meetings so far have been very "positive" and the bank expects to begin operations by October or November.

"We have identified the place where the branch would come up in Delhi. And, initially, we plan to recruit around 15 employees from India and three from Russia," he added.

Dr Yakovlev said that the bank identified India as a location because it would encourage development of the bilateral trade and economic partnership between the two countries.

"There are a lot of Russian companies in infrastructure, steel, power, defence and metallurgy sectors that are doing business in India. And they are facing problems on issues that arise in their foreign economic activities. The companies also have to overcome hurdles in getting guarantees, we will address some of these issues," Dr Yakovlev said.

He, however, did not divulge the minimum capital that the bank plans to start operations with. "As per the RBI norm, the minimum capital required is $25 million. But we plan to bring in more than this," he said.

Apart from opening a branch in Delhi, VTB is also looking at opening a back office in Mumbai. "We might open a branch in Mumbai at a later date, but initially will only have a back office there. It will be responsible for getting us new clients," he said.

VTB recently raised $8 billion in an initial public offering (IPO), the largest in the world this year. Post-IPO, the Government of the Russian Federation is the majority shareholder with shares accounting for 77.5 per cent. The assets of the bank as of December 31, 2006, amounted up to $52 billion and it posted a net profit of $1.2 billion.

Apart from opening office in India, the bank is also looking at a presence in Shanghai and West Asia.