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Sunday, December 11, 2005

Germany's Dresdner To Buy Into Gazpron's Bank

12-09-2005 The St. Petersburg Times By Catherine Belton Staff Writer - Germany's Dresdner Bank is to buy one-third of Gazprombank, the subsidiary bank of Russia's powerful state-controlled gas giant, for $800 million in the second major German-Russian financial deal this week. Gazprombank said Wednesday that its board of directors had agreed to sell 6.67 million new shares to Dresdner for at least 23.2 billion rubles in a deal expected to go ahead in early 2006. The bank, Russia's third-largest, said the tie-up was aimed at improving its business and increasing its capital ahead of a possible initial public offering of its shares in London. The deal will further solidify a longtime partnership between Gazprom and the German bank, whose investment-banking arm in October advised Gazprom on its $13 billion purchase of Roman Abramovich's Sibneft. It will also likely strengthen ties between Dresdner and the Kremlin. Dresdner has played a key role in helping the Kremlin tighten its hold over the energy sector, and President Vladimir Putin is reported to have ties to the head of Dresdner's Moscow division, Mattias Warnig, that go back to his days as a KGB agent in Soviet-controlled East Germany. The Wall Street Journal earlier this year cited documents from East Germany's Stasi secret police and former colleagues of Warnig's as saying that he previously worked as a Stasi agent and helped Putin recruit spies in the West.Warnig has denied the report. The announcement of Dresdner's tie-up with Gazprombank came after Deutsche Bank said earlier this week that it had bought the remaining 60 percent of shares in investment bank United Financial Group. The deal was thought to be worth about $400 million. The two German deals are the latest in a series of investments by Western banks, which are rushing to invest in Russia's booming banking market. Other recent deals include loans by Morgan Stanley and Citibank to the Rosneft state oil company ahead of planned IPO in London. But while the UFG deal appeared aimed at securing a major role for Deutsche Bank in the country's upcoming stream of expected IPOs, Dresdner's acquisition of a blocking stake in Gazprombank appeared more likely to be a short term financial investment ahead of the Russian bank's IPO. With assets of $15 billion as of Sept. 30, the bank is often seen as Gazprom's treasury department. It has acted on Gazprom's behalf in acquiring significant stakes in electricity monopoly Unified Energy Systems and also holds the gas giant's vast media assets, including NTV television and the Izvestia daily newspaper. "This is a much bigger fish than UFG," one banker said on condition of anonymity. Gazprombank's chairman, Andrei Akimov, the low-profile former head of the Central Bank's foreign subsidiary, Donau Bank in Austria, counts among his aides Alexander Ivanov, the son of Defense Minister Sergei Ivanov. "Gazprom wants to expand the role of Gazprombank from being a proxy for the treasury department to become a more broad-based bank to compete with … Vneshtorgbank and Alfa Bank," said Chris Weafer, chief strategist at Alfa Bank. "This is consistent with the government's overall objective for state companies to take a dominant role in strategic industries, and it is another sign of how lucrative the Russian banking sector appears to foreign banks."

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