Putin Says State-owned VTB Bank to Manage Russia's Main Shipbuilder

Russian President Vladimir Putin on Thursday asked the state-owned VTB bank to manage the state's 100% stake in United Shipbuilding Corporation (USC), Russia's largest shipbuilder, to solve financial problems at the firm.

Putin's decision effectively transfers control of Russia's premier shipbuilding assets to Moscow-based VTB, which has been run by Andrei Kostin, one of Russia's most influential bankers, for the past 21 years.

USC builds civilian vessels as well as nuclear submarines, aircraft carriers and other warships. It operates about 40 shipyards, design offices and repair yards across Russia, employing 95,000 staff.

Putin told VTB CEO Kostin at a televised Kremlin meeting that he supported a government proposal to transfer the stake, but that there were many financial problems and "questions" at USC that needed resolving. 

Kostin, a former diplomat, said the news of the transfer was unexpected, telling him: "Vladimir Vladimirovich - my reaction is: thank you for your trust." 

Trade and Industry Minister Denis Manturov specified that VTB would manage the stake in trust for five years. The bank's shares were up over 4% at 1255 GMT.

Putin said he hoped VTB's bankers could resolve the problems at USC, whose board chairman is Georgy Poltavchenko, a former KGB officer who served as governor of Putin's hometown of St Petersburg from 2011 to 2018. USC's general director is Alexei Rakhmanov. 

"We work closely with both the corporation and the enterprises that are part of the corporation, so we know the problems, especially with regard to the organisation of financing," Kostin said.

"I am sure that with your support we will cope with this task and will do our best to solve all the problems."

Manturov said decrees transferring the shares would be prepared.

"The decision will contribute to the long-term stabilization of the financial condition of the largest state-owned shipbuilding holding," he said, adding that he expected VTB to "attract extra-budgetary funding" and "bring the corporation into profit".

VTB said the changes should not affect USC's obligations to its customers and employees, and that its priority was to ensure that operations continued smoothly.

Russia's war in Ukraine, which it calls a "special military operation", has exposed serious deficiencies in its military as well as its defense industry, despite billions of dollars of investment since Putin was handed the top Kremlin job on the last day of 1999.

Almost all of Russia's warships were historically built by Soviet enterprises that are part of USC.

In 2020, the last year for which publicly available financial documents are available, USC had revenues of 339 billion roubles - equivalent to about $4.7 billion at exchange rates of the time, or $3.5 billion now.

 ($1 = 96.1500 roubles)

 (Reporting by Guy Faulconbridge in Moscow and Gleb Stolaryov in Tbilisi; Editing by Kevin Liffey)