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Sistema offloads controlling stake in MTS Bank to MTS

BBR Staff Writer Published 06 July 2018

Russian conglomerate Sistema has sold its 28.63% stake in MTS Bank to Mobile TeleSystems for RUB8.27bn ($130m).

Mobile TeleSystems is a subsidiary of Russian telecommunications operator and digital service provider MTS.

As a result of the transaction, Sistema will be bringing down its stake in MTS Bank to 43.24%.

On the other hand, MTS will be raising its stake from 26.61% to 55.24% in MTS Bank, which ranks among the 50 largest banks in Russia.

The remaining stake in the Russian bank is held by other shareholders.

Founded in 1993, MTS Bank operates based on the universal banking business model, according to which a major portion of revenues is generated by lending to individuals and corporate clients. Its primary source of liabilities is customer funds, from both individuals and corporates.

According to Sistema, the transaction consolidates on the partnership launched between MTS and MTS Bank in 2011 to promote digital payment solutions and the issuance of credit cards and PoS loans.

The Russian conglomerate added that MTS Bank through the MTS partnership has expanded its customer base, streamlined its IT systems and business processes to eventually achieve sustained profitability last year.

By giving MTS the controlling stake in MTS Bank, the bank will be in a position to advance the build-out of the former’s platform of digital products and customized offerings in the fast-growing fintech business, said Sistema.

Sistema managing partner and MTS Bank board of directors chairman said: “MTS’s acquisition of a controlling stake in MTS Bank will accelerate development of the Bank, while allowing Sistema to monetize its investments in the banking sector.

“The transaction enhances MTS’s role as a digital service provider while its core telecom business will also benefit from higher penetration of data services and increased customer loyalty driven by adoption of fintech products.”

The transaction has secured all the mandatory regulatory and corporate approvals.

MTS president and CEO Alexey Kornya said: "The acquisition of the controlling stake in MTS Bank is in line with our strategy to diversify the business, achieve synergies and develop innovative financial services.

“The deal allows us to consolidate MTS business in the Russian FinTech market, which grows by more than 10% per year, simplifies corporate and operational management, and most importantly - accelerates the launch of new products.”

Image: Sistema Group head office in Moscow. Photo: courtesy of A.Savin, Wikimedia Commons.