Russia's VTB sees no significant losses from country's default

June 16, 2016 9:36 AM

Mozambique Asset Management (MAM) borrowed $535 million from VTB to build shipyards in Maputo and the northern town of Pemba in expectation of a rapid takeoff in the offshore gas sector.

A sign displaying the logotype of VTB Bank, covered with icicles, is seen above the bank office in central Moscow, file.

Russia's VTB does not expect any significant losses from its operations in Mozambique despite experiencing problems with a major loan, VTB Chief Executive Andrei Kostin told Reuters in an interview.

But MAM missed a May 23 deadline for its first loan repayment of $178 million.

VTB said this month it had shared the bulk of its $535 million loan to MAM, a state firm, with investors active in that region. It did not disclose which investors.

VTB, along with Credit Suisse, also helped to arrange a $622 million loan for maritime security projects for Proindicus, a state-owned firm owned by the defence and interior ministries and state security service.

"Mozambique was not a bad deal and given even the current situation possible losses are in line with expected profit. We have a portfolio sold out on the market so any significant losses for the bank should not be expected," Kostin said. "We are in talks with Mozambique. Our position is that the country should serve, pay off, honour its obligations." Kostin said he saw the African continent in general as a "high risk zone" but one where operations should continue.

"Investors invested in Greece and look how they got burned - but Mozambique is way better than Greece," he said.