Administrators of the defunct City arm of VTB Capital expect the wind-up to take a further five years as the Russian bank has racked up millions in staff costs and fees since it was slapped with sanctions in 2022.
VTB Capital’s UK arm was placed into administration in December 2022, following widespread sanctions on Russian-owned businesses in the UK after the country’s invasion of Ukraine earlier in the year.
Teneo, which is overseeing the administration, has applied to have the “complex” process of winding up the Russian bank extended until 5 December 2029, according to an update on progress. It had initially extended the administration process, which includes recovering hundreds of millions in securities deposits, until December this year.
The Russian bank, which had offices in the heart of the City, employed 13 key staff at the end of June, according to an update by Teneo.
VTB laid off around 90% of its employees in March 2022 after it started to wind-down. The remaining number has been gradually shrinking since, but the staffers are still on pre-administration contracts.
Compensation expenses were £5.8m for the period from December to June, an average payout of £446,615. Teneo said in the report that “all but two” employees have had their hours reduced since 1 July to “align with the evolving VTBC wind-down strategy”.
VTB has shelled out £20.8m on employees since the wind-down process began.
Meanwhile, administrators have now worked 19,457 hours on VTB’s London wind-down, bringing in £18.7m in fees.
In addition to 15.9 trillion rubles in cash, Russians hold the equivalent of $94 billion in foreign currency. Those figures compare to the 56 trillion rubles of Russians’ savings held in banks, which are gone now.
Western sanctions took a toll
Western sanctions imposed on Russia over its military action in Ukraine will not be lifted anytime soon, the CEO of Russia’s second largest lender VTB Andrei Kostin told Reuters in an interview.
“I don’t really believe that the sanctions will be lifted quickly. I don’t see how that is possible. A good example is the Jackson-Vanik amendment. It was enacted against the USSR, and it was only repealed in 2012,” Kostin said.
Kostin was referring to a law that dated back to the Cold War years and linkeds trade relations with the Soviet Union to the rights of religious minorities to emigrate.
Kostin said he thought that Russia’s forex reserves, frozen in the West after the start of the Ukraine conflict, would not be returned.
“In the West, they say, let’s pay for the reconstruction of Ukraine from the reserves. And they will draw up such a bill that even the reserves will not be enough,” Kostin predicted.
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