Russia's VTB bank asks Kremlin to control lucrative grain exports
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Russia's VTB bank asks Kremlin to control lucrative grain exports

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UkrAgroConsult

Russia's second-largest state-controlled bank, VTB Bank, has reportedly asked President Vladimir Putin for support in creating a national grain trader which would give the state more control over lucrative grain exports and push foreign traders aside, Reuters and RBC business portal reported on August 23 citing a letter by VTB's CEO and Kremlin loyalist Andrei Kostin sent to Putin.

As reported by bne IntelliNews, VTB has been hoovering up assets in the grain export sector and now controls about a fifth of the business. Russia is now earning some $20bn a year from grain exports – more than it earns from arms exports.

Reportedly, the United Grain Holding (UGH) proposed by VTB could consolidate transportation and storage assets and "take on the functions of a leading trader of Russian wheat," Kostin argued to Putin, noting that currently foreign traders control 25% of grain terminal capacity and 50% of capacity in foreign ports "not always on optimal conditions".

VTB asks for four main mesures: to entrust the government to unite grain terminal clusters in Novorosiysk and Taman ports, help finance railroad and road infrastructure in the ports, modernise grain transportation gondolas in 2020-2023, and prepare for privatisation of UGH (currently controlled by Rosimushestvo state property agency and VTB).

The Ministry of Agriculture commented to RBC that the privatisation of UGH is seen as "premature". Industry participants and union representatives remarked that setting up a state monopoly on the grain market would be detrimental to market participants and overall market efficiency.


intellinews.com

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