Traders are working for free and face daily struggles to keep sanctioned VTB viable, in the new reality facing a Russian trader in Europe.
(Bloomberg) — Traders are working for free and face daily struggles to keep sanctioned VTB viable, in the new reality facing a Russian trader in Europe.
Russian state-backed lender VTB Group’s commodities trading arm has slashed its headcount to 19 staff from over 80 and many had to work without pay for a “prolonged period.” All their contracts are set to expire at the end of the year, according to a recent London court ruling, which lays bare the extent to which the business has been “significantly reduced.”
VTB was among the first Russian financial services firms sanctioned by the UK and the European Union, effectively cutting it off from the global financial system.
Meanwhile the British arm is still seeking administration protection in the English courts in order to safeguard creditors.
The commodities unit’s chief executive officer, Nick Hutt, turned up to court in person this month to represent the firm in a $30 million lawsuit with oil trader Petraco Oil Company SA.
He said the company was having to “firefight on a daily basis.”
“VTB’s attitude appears to have been one in which it has thrown up its hands in despair, proclaiming how unfair everything is, rather than doing what it can with the resources it has to move matters along,” Judge David Foxton said in the Nov.
4 ruling, where he adjourned the trial until November next year.
In recent years, VTB had spearheaded an effort by Russian banks to fill a void left in commodities markets as their western counterparts scaled back, and its rapid expansion turned the company into a significant trader and financier in industrial metals markets.
The firm has had a “succession of crises to be managed,” the judge said, cataloging how it struggled to pay debts, worked to replace suppliers who refused to deal with the unit, and sought to replace departing staff.
Around half of the 19 staff are traders, the judge said, and the firm employs one Swiss lawyer.
VTB is applying for a license from the UK Treasury which enables sanctioned firms to pay for external legal representation.
Its former solicitors PCB Byrne stopped working for the company when VTB was unable to pay legal fees, meaning Hutt had to represent the firm himself.
The trial costs will be so high that the judge said that even the newly-available broad legal license that caps costs at as much as £1 million ($1.15 million) will be insufficient in this case.
Hutt didn’t respond to a request for comment.
–With assistance from Archie Hunter.
(Updates with number of traders in eighth paragraph.)
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