Foreigners to need permit to buy into Russian financial infrastructure firms

Russia is preparing a law requiring foreign investors to get government permission for a purchase of five or more percent in the country's financial infrastructure companies, Vedomosti business daily quoted Head of the Federal Service for Financial Markets Vladimir Milovidov.

"At the Finance Ministry's suggestion, we are drafting a law under which we will control nonresidents' acquisitions of over five percent of shares in financial infrastructure companies," Milovidov was quoted by Vedomosti as saying. "We must understand how these deals fit government policy."

Preparation of the draft was triggered by the European Bank for Reconstruction and Development's plans to buy 10 percent of Russia's RTS stock exchange from troubled KIT Finance group.

Milovidov and Federal Security Service head Alexander Bortnikov wrote to Prime Minister Vladimir Putin saying that a higher nonresident stake in the RTS would prevent it from merging with the MICEX exchange, and as a result from creating Russia's International Financial Centre in Moscow, one of President Dmitry Medvedev's favorite projects.

The government has drawn up three options for the RTS stake sale - to the Deposit Insurance Agency, KIT Finance's creditor; to a Russian financial investor, or to the EBRD on condition it supports the RTS' merger with the MICEX.

Vedomosti quoted EBRD President Tomas Mirow as saying in his letter to Putin that the bank was ready to start working on consolidation of the exchanges.

KIT Finance has sent an offer to sell the stake to eight state-controlled companies, but none of them agreed to buy it, the paper said.

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