November 16, 2017 / 5:42 PM / a month ago

UPDATE 1-Shares in Russia's No.2 lender VTB hit three-year low

(Adds detail, updates prices)

MOSCOW, Nov 16 (Reuters) - Shares in Russia’s second-biggest lender, VTB, fell to their lowest level since December 2014 in trading in Moscow, losing 15 percent of value over five days of consecutive declines.

There was no immediate consensus among traders about the reason for the fall, with some saying it was linked to Russian exposure to Venezuelan debt and another tying it to market concerns about VTB’s liquidity position or to a sell off by a large stakeholder.

During the trading session on the Moscow Exchange, VTB’s shares fell as much as by 9.7 percent to 0.0501 roubles ($0.0008), their weakest since Dec. 8, 2014. Shares ended the trading session 6.2 percent lower at 0.0521 roubles.

VTB’s press-service, contacted by Reuters, said the bank does not comment moves in the share price.

“There are absolutely no fundamental reasons for the decline in our securities,” the bank said in an emailed comment.

Shares in VTB started falling last Friday, the day when Raiffeisenbank said in a research note that VTB’s net borrowings from the central bank and the finance ministry has grown by almost 300 billion roubles ($5 billion) as of Oct. 1 from the end of the second quarter, to reach 907 billion roubles.

“VTB’s shares ... have been on the radar of foreign investors for a long time now, therefore any selling can trigger this kind of strong movement in shares,” said a trader at a Russian investment firm.

Separately, a representative of an investment fund said a share in VTB owned by Otkritie bank could have been put on sale after the central bank bailed out Otkritie earlier this year.

Otkritie bank, which owned a 5.45 percent stake in VTB, said it and company’s that are part of the bank’s group did not sell shares in VTB.

The drop in VTB shares came amid a proposal of Norway’s trillion-dollar sovereign wealth fund to drop oil and gas companies from its benchmark index, which would mean cutting its investments in those companies.

According to Norway’s Government Pension Fund Global, it owned a 0.03 percent stake in VTB.

VTB shares under-performed the wider Russian market, which was broadly flat, but Russian banking stocks were pulled lower. Moscow stock exchange’s financial sector index was down 1.3 percent.

On Wednesday, VTB, which is controlled by the Russian state, announced an issue of rouble bonds worth a total of 15 billion roubles. The yield was 8 percent, higher than some of the yields offered on the bank’s deposits.

Russia’s banking sector is under increased scrutiny after two major private lenders, Otkritie Bank & B&N Bank, had to seek central bank bailouts earlier this year because of holes in their balance sheets.

Most banking sector insiders say further bank failures are possible, but that big banks such as THE STATE CONTROLLED VTB and Russia’s largest lender Sberbank, are secure because they have access to large reserves of capital. ($1 = 59.6405 roubles) (Reporting by Zlata Garasyuta, Jack Stubbs, Polina Nikolskaya, Katya Golubkova and Elena Fabrichnaya; Writing by Christian Lowe and Andrey Ostroukh; Editing by Hugh Lawson)

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