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Russia's VTB to invest $1.5 bln to capitalize its subsidiaries

Russia's state-controlled foreign trade bank Vneshtorgbank (VTB) intends to invest $1.5 billion by mid-2008 to capitalize its subsidiaries and acquire banks in former Soviet republics, the bank's chief executive said Friday.

Andrei Kostin, speaking in Vienna at the first banking forum of East European states and members of the Commonwealth of Independent States (CIS), a loose association of ex-Soviet republics, said Vneshtorgbank planned to increase its presence in all CIS member states. "Our task is to establish subsidiary banks in the CIS. By the middle of next year, we intend to create a system of banks in all the 12 CIS states," Kostin said.

In May 2007 the bank, Russia's second largest in terms of assets and equity, managed to raise $8 billion through an initial public offering (IPO). VTB earlier said it intended to use the IPO proceeds for its development. Kostin said VTB plans to remove a 10.5% stake in Russia's largest diamond producer Alrosa from its balance sheet within a month, but declined to specify to whom the shares would be transferred. (