Updated June 17, 2008

Gazprom continues to cut its presence in affiliated structures. Gas monopolist intends to cut its representatives number in Gazprombank directors’ board, and that enables it to exclude the bank from the consolidated reporting. In experts’ opinion, Gazprom does so to improve its financial indices and to prepare Gazprombank to IPO.

According to Gazprombank investment memorandum of Eurobonds placement of $10 billion, this year Gazprom will propose only five but not eleven candidates to the bank directors’ board. Gazprombank stockholders’ meeting will choose the board within the annual meeting on June, 24. At the moment 7 representatives of the gas monopoly are among the bank directors’ board. Thus, the rest represents mainly structures affiliated with the gas monopoly. "There is no a single independent director in directors’ board", marks Uralsib Financial Corporation analyst of banking sector Leonid Slipchenko.

Gazprombank enters top three of the largest Russian banks. According to Kommersant-Dengi journal data, as of January 1, 2008 the bank occupies the 3rd place by equity capital size (RUR 93 billion) and the 3rd place by net assets sum (RUR 796,2 billion). According to IFRS for 2007 (International Financial Reporting Standards), the bank revenue went by 8% down, to $1,2 billion. As of June, 6 the core bank stockholders are Gazprom (41,73%) and non-state pension fund Gazfond (50% plus one stock). Thus, Gazfond owns 7,11% of Gazprombank stocks directly; 17,15% and 17,17% own Gaz-Service and Gazkon respectively. Lider management company (manages Gazfond assets) owns 8,57% of the bank stocks and 6,27% belong to OJSC New financial technologies (Gazprombank subsidiary).

After Gazprom refuses the majority of votes in Gazprombank directors’ board, it can officially exclude the bank activity results from the consolidated reporting of Gazprom group. Analysts suppose Gazprom continues to distance from non-core assets. "Within the last one and a half year Gazprom has been step-by-step reducing control over Gazprombank, just officially perhaps", says Trust bank analyst Aleksey Demkin. In December, 2006 Gazprom stake in the bank was reduced from 45,76% to 41,73% as a result of additional emission of Gazprombank stocks and operations with them at the secondary market. "However, this did not hinder the gas monopoly to consolidate the bank financial indices in its reporting", as marks Mr. Demkin. Thus, beginning from 1Q 2007 Gazprom has excluded the controlled non-state pension fund Gazfond from the consolidated reporting. In April, 2008 Gazfond sold 34,3% Gazprombank stocks to its affiliated companies – Gazkon and Gas-Service.

Bank exclusion from Gazprom consolidated reporting improves the group balance sheet ratios, debt load in particular, as supposes Troika Dialog analyst Olga Veselova. According to Mr. Demkin calculations, by 2007 end Gazprombank input to the consolidated debt of Gazprom group totaled around $7,4 billion or around 12%.

"These simultaneous Gazprom actions show that Gazprombank prepares to hold IPO", is sure Leonid Slipchenko. In February, 2007 chairman of Gazprombank board Alexander Sobol declared the bank would hold IPO not sooner than in June next year. According to analysts estimations, Gazprombank intends to place 15-20% stocks at the public market, and expects to attract $1-1,4 billion within IPO.