Payouts to creditors of London VTB Bank move closer

Creditors of the British subsidiary of Russia’s second largest bank will vote on a scheme to allow a repayment of their funds nearly two years after the unit was placed in administration.
The London division of VTB Bank began insolvency proceedings when sanctions crippled its operations after Russia’s invasion of Ukraine. It was also suspended from the London Stock Exchange.
Since then the bank’s creditors have been in limbo as administrators seek to wind down the division while observing the rules that bar payments to Russian-owned entities.
Teneo, which has been handling the insolvency, has drawn up a scheme to allow assets owned by disqualified or sanctioned individuals to be placed in a trust. This will clear a path for payouts to other creditors.
The plan was approved in the High Court in July and the administrators will seek creditors’ approval on September 5. It is understood that the vote could help to deliver an initial return for investors before the end of the year. It also increases the likelihood of creditors being repaid in full in time.
VTB Bank once had 120 staff in an office opposite the Bank of England, but it has cut employee numbers during its winding down. Teneo has sought licences from the Office of Financial Sanctions Implementation to allow payments during the administration and has made similar requests in the United States. The scheme for returning funds to creditors has received approval from the Prudential Regulation Authority.
The sanctions instigated at the start of the Ukraine war created stranded assets in both the West and Russia. BP and Glencore were forced to write down investments in Rosneft, the energy company, and Russian banks are unable to gain access to assets overseas.
Sberbank, Russia’s largest bank, recently seized Glencore’s minority stake in Rosneft. The lender secured court approval to confiscate the 0.57 per cent stake as payment for an oil debt owed by Glencore to a subsidiary in Switzerland. Glencore’s appeal was dismissed by the Moscow arbitration court last week.
In response to western sanctions, VTB Bank has expanded its presence in China and plans to open offices in Beijing and other cities.