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Russia’s central bank has reached an agreement to sell 100% of shares of Otkritie Bank to VTB Bank in a deal valued at RUB340bn ($5.03bn).

According to the central bank, the transaction comprises RUB233.12bn ($3.45bn) in cash and federal government bonds worth over RUB106.87bn ($1.57bn). 

Otkritie was bailed out by the central bank in 2017 after it crashed due to bad debt and since then the Bank of Russia has been looking to divest its stake via a public offering or sale.

Italian financial group UniCredit had expressed interest in purchasing Otkritie in January of this year but later withdrew its offer due to unrest in Ukraine.

Western sanctions imposed in response to the Russian invasion of Ukraine have targeted both VTB and Otkritie.

The parties have agreed to transfer all shares of Otkritie to VTB by 31 December 2022 provided that VTB fulfils its obligations to pay in full, the banking regulator said in a statement.

The transaction has secured clearance from the supervisory board of VTB.

Otkritie is believed to have approximately 500 locations operating throughout Russia and serving retail, SME, corporate, and individual clients.

“This deal will ensure the development of the banking sector without the involvement of the central bank as owner,” the Bank of Russia Governor Elvira Nabiullina was quoted by Reuters as saying

According to the central bank, it invested RUB555bn ($8.22bn) roubles in the bailout and would receive a RUB352bn ($5.21bn) refund after taking dividends into account.