Friday, February 3, 2012

Putin Orders Share Buyback

Russian Prime Minister Vladimir Putin instructed the country's No.2 bank, VTB, to compensate small investors who lost money in its stock market flotation. Shares in VTB, which is 75.5 percent government owned, are trading at around 7 kopecks, just over half the price of 13.6 kopecks at which they were floated in 2007 when over 100,000 small investors bought the stock during its so-called “people’s IPO.” Answering a question of an unhappy foreign investor at an investor conference, Putin offered to buy back VTB's shares at the original issue price. "I can instruct the bank's management to work out a plan to buy back these shares so that you do not suffer any losses," Putin said. Calling on a surprised Andrei Kostin, the head of VTB who happened to be sitting in the audience, the prime minister announced that they would meet to discuss a share buy-back on Monday. The buyback should cost the bank about $500 mln.

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