State company of Mozambique Mozambique Asset Management (MAM) paid VTB Bank $35 million for granting loan of $535 million in 2014 — about 7% of the loan amount that far exceeds the usual Commission for such deals, says Reuters , citing documentation for the loan and the opinion of anonymous African bankers.
“VTB Capital” in may 2014 listed MAM $435 million, as a Commission for granting of credit in the amount of $28,46 million, and later transferred to the borrower another $100 million at $commision of 6.54 million, from last year’s letter, “VTB Capital” auditors EY in Maputo (capital of Mozambique), writes Reuters. The size of the fee as a percentage of the loan amount (6,5%) is “excessive”, given the industry standard of 1% for such transactions, said the Agency three banker in Johannesburg who is familiar with the organization of sovereign loans in Africa. “If it’s a really difficult loan, you can raise fees up to 2%,” Reuters quoted one of the bankers.
VTB says that the $35 million paid from the MAM, included not only the Commission but also the interest on the loan, which MAM has agreed to pay in advance. But the South African bankers who spoke to Reuters, saying that the immediate interest payments from income on the same loan — unconventional financing scheme.
“Deal, “VTB Capital” to provide funding Sierra Leone Asset Management is a private bilateral transaction, and not a syndicated loan, therefore, the comparison with other syndicated credits incorrectly”, — told RBC press service of VTB in response to a request to comment on a note to Reuters. Rate on the loan was agreed at LIBOR + of 8.87% per annum is “absolutely market and a standard for the region of Central and West Africa in attracting bilateral funding”. At the request of the borrower and the guarantor, the rate was formed on the basis of two components — the annually paid interests on debt and directly to the Commission for arranging the deal, reported the Bank press service.
On 8 June the Minister of Finance of Mozambique Adrian Malejane said that the Mozambique state Fund Asset Management (MAM) failed 23 may to spend the loan payment on the $535 million received from the Russian Bank VTB for construction of shipyards. The Minister noted that negotiations on debt restructuring. The loan was issued under the state guarantees of Mozambique, therefore, the MAM-payment of interest may result in a sovereign default.
The Wall Street Journal on June 3 wrote that VTB and Credit Suisse are suspected of having violated the existing UK disclosure rules by not providing investors with information about the two loans worth more than $1 billion granted to state companies of Mozambique, with the participation of these banks. In particular, it was about the loan of $535 million for the company’s Mozambique Asset Management.
The press service of VTB then exclude that the Bank will incur material losses because of the deal. “The loan MAM is $535 million, and the risk of this position in the amount of $485 million was transferred to the investors who are active in the region. The balance of the debt without any material losses for VTB. In addition, we are actively working with the government of Mozambique to stabilize the situation, and at the moment don’t expect her deterioration,” — said the press service of VTB.
Mozambique in late may, Moscow sent a delegation for talks with top managers of VTB, says Reuters, citing a source in a Russian Bank.