Vostochny Bank

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Vostochny Bank

Vostochny Bank (Russian: банк Восточный; sometimes translated as Orient Express Bank) is a Russian financial company based in Blagoveshchensk, Amur Oblast. It was established in 1991.[1]

Vostochny Bank focuses on the Siberian and Far Eastern markets,[2] and ranks among the 30 largest Russian banks by assets.[3] The private equity firm Baring Vostok owns a stake in Vostochny.[4]

History[edit]

Office of Vostochny Bank

In 2010 it purchased Consumer Bank, a Russian subsidiary of Banco Santander, and Morgan Stanley's City Mortgage Bank.[5] In 2015 the bank reduced its workforce by half, laying off 4,000 employees.[6] In 2016 it merged with Uniastrum Bank.[2]

After the merger, Uniastrum bank owner Artem Avetisyan acquired a 32% stake in Vostochny via his Finvision Holdings. At that time, Baring Vostok Capital Partners investment fund controlled 51.2% of Vostochny via Evision Holdings. In 2018, a dispute took place between the major shareholders. Evision Holdings didn't let Finvision Holdings execute a call option for a 9.9% stake in the bank acquired by the latter in the M&A deal. In June 2019, Amur Region Arbitration Court ordered Evision Holdings to execute the option and sell the shares to Finvision Holdings.[7] London Court of Internation Arbitration (LCIA) upheld Finvision's right to execute the call option and dismissed the arguments provided by Evision Holdings.[8]

Baring Vostok abide by the decision of the court and executed the option in mid-2020.[9] Finvision Holding gained control over 42.01% and Evision Holding's share decreased to 41.63%. [citation needed]

The arbitration proceedings between the parties took place simultaneously with the criminal investigation of the alleged misappropriation of 2.5 billion rubles of Vostochny bank's funds by Baring Vostok top managers, including the firm's founder Michael Calvey. Calvey and his colleagues were put under arrest. Some media linked criminal investigation with the arbitration proceedings.[10] However, both Baring Vostok and Finvision Holdings denied such claims and admitted that the corporate dispute was unrelated to the criminal case.[11]

In October 2020, Vostochny bank's shareholders signed the settlement agreement[12] under which Baring Vostok refunded 2.5 billion rubles to Vostochny bank.[13] In August 2021, the court found the top managers of Baring Vostok guilty of embezzling Vostochny Bank's funds and sentenced them to suspended sentences.[14]

In March 2021, Sovcombank (a large private Russian bank) announced the purchase of Vostochny Bank.[15] The deal was closed in April. Sovcombank acquired 88% of the bank's shares for 8.7 billion rubles. By the end of 2021, Sovcombank acquired 100% of Vostochny bank's shares and completed the operational integration of the banks. On February 14, 2022, Vostochny bank was merged into Sovcombank and liquidated.[16]

References[edit]

  1. ^ "Orient Express Bank". ebrd.com. Retrieved 29 August 2017.
  2. ^ a b "Russia's Uniastrum to merge with Orient Express as banking consolidation accelerates". Intellinews. Retrieved 29 August 2017.
  3. ^ "Banker Kim Seeks Foreign Assets". The Moscow Times. Retrieved 29 August 2017.
  4. ^ "Foreign Investor for Orient Express Bank". The Moscow Times. Retrieved 29 August 2017.
  5. ^ "Morgan Stanley sold the City Mortage Bank". Forbes. 2 July 2010. Retrieved 26 April 2022.
  6. ^ "25,000 Employees Fired From Russian Retail Banks This Year". The Moscow Times. Retrieved 29 August 2017.
  7. ^ "The court ordered Baring Vostok structure to execute the 9.9% option for Vostochny bank shares". TASS. 17 May 2019. Retrieved 26 April 2022.
  8. ^ Pavel Kazarnovsky (17 June 2019). "An arbitrary court in London supported Avetisyan in the dispute regarding Vostochny bank's shares". RBC. Retrieved 26 April 2022.
  9. ^ "Baring Vostok transferred the ownership over 10% of Vostochny to Avetisyan's company and lost control over the bank". Interfax. 18 June 2020. Retrieved 26 April 2022.
  10. ^ "Artem Avetisyan criticized the media and the Russian Union of Industrialists and Entrepreneurs Ethics Committee in regard to Michael Calvey's case". Interfax. 7 June 2019. Retrieved 26 April 2022.
  11. ^ "Vostochny bank's shareholders settled the dispute". BFM. 28 October 2020. Retrieved 26 April 2022.
  12. ^ "Baring and Avetisyan's company settled the conflict over Vostochny bank". RBC. 28 October 2020. Retrieved 26 April 2022.
  13. ^ "The collection agency from Calvey's case returned 2.5 billion rubles to Vostochny bank". TASS. 9 November 2020. Retrieved 26 April 2022.
  14. ^ "The court decided on suspended sentences for the actors of Baring Vostok case". Interfax. 6 August 2021. Retrieved 26 April 2022.
  15. ^ "Совкомбанк официально объявил о покупке акций банка "Восточный"" (in Russian). Interfax. 2021-03-25.
  16. ^ "Vostochny bank is no more". TASS. 16 February 2022. Retrieved 26 April 2022.

External links[edit]

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