Russia’s No. 2 Bank Seeks Mozambique Debt Talks After Default

MAPUTO (Capital Markets in Africa) – The head of Russia’s second-biggest bank wants to meet with Mozambican President Filipe Nyusi and other officials soon to attempt to start negotiations over restructuring about $2 billion in debt, which haveyet to formally begin since the country defaulted a year ago.

“We would like to convince them to start more negotiations with investors for restructuring the debt,” VTB Group Chief Executive Officer Andrey Kostin said in a Bloomberg Television interview at the World Economic Forum in Davos, Switzerland.

Mozambique in 2016 disclosed more than $1 billion of previously hidden loans, leading the International Monetary Fund and 14 donor countries to freeze aid to the impoverished nation. The country defaulted on its debt last January, and has since missed further interest payments on the loans arranged by banks including VTB.

Kostin said several past audits by British authorities didn’t find any misdeeds on the part of VTB. The Federal Bureau of Investigation is examining whether VTB, Credit Suisse Group AG and BNP Paribas SA facilitated corruption by enabling officials from the African nation to take money raised in the debt sales, the Wall Street Journal reported in November, citing unidentified people familiar with the matter.

“I don’t think the FBI or somebody else will find any wrongdoing,” Kostin said. “If they do, I will very much appreciate if they inform me because we’re definitely very concerned about the good name of our bank.”

VTB has disputed a Kroll LLC audit last year that said VTB and others were paid almost $200 million in fees to arrange the loans in question.

Despite its issues in Mozambique, Kostin said Wednesday his bank is looking to expand in Africa, as well as in India and throughout Asia. VTB has scaled back its European ambitions, merging its three units this year into a single lender based in Frankfurt. The state-owned lender is subject to sanctions that were imposed in response to Russia’s 2014 annexation of Crimea from Ukraine.

As part of its African strategy, Kostin recently met with Angola’s President Joao Lourenco to discuss restructuring that country’s $1.5 billion debt to the bank and potential new projects.

“I think its a country with a lot of potential,” he said.

Source: Bloomberg Business News