VTB Tightens Grip on Black Sea Grain Export Hub

Russia's second-biggest bank VTB is buying one of the biggest grain terminals at the Black Sea port of Novorossiisk, in a surprise move that gives the state lender more control over the country's main deep-sea grain export hub.

VTB, which already owns a stake in another grain terminal at the port, said on Thursday that it was buying 100 percent of Novorossiysk Grain Terminal from Novorossiysk Commercial Sea Port (NSCP).

Its deal to buy the terminal from NSCP, which is controlled by another powerful state-controlled group - oil pipeline monopoly Transneft - was unexpected as Transneft said in January that it would work on creating a single operator at Russia's southern grain terminals.

Some commodities traders interpreted VTB's deal as another sign of the Russian government's growing involvement in the sector.

Russia is the world's largest wheat exporter and the country ships a significant part of its grain exports from the two terminals at Novorossiisk.

"We have an agreement, it (NSCP) will not be dealing with grain anymore," VTB's CEO Andrei Kostin told reporters.

Officials in Russia are closely monitoring the pace of grain exports this season due to a smaller 2018 crop. This has spurred market speculation that Russia could limit exports later in the 2018/19 season, which ends on June 30.

Traders have already been unnerved by the agriculture ministry's recent decision to set up a new grain exporters' association to better understand the needs of the market.

"First the Russian government says it wants to set up its own grain export association and then another semi-state organization takes direct control of more grain export infrastructure," a European trader said.

"The question has to be raised about whether there is a pattern in this towards Russian state control of the grain export industry."

VTB said its deal to buy Novorossiysk Grain Terminal had been approved by Russian regulators and was expected to close in the second quarter. It did not say how much it was paying.

VTB First Deputy CEO Yuri Soloviev told reporters that VTB sees the possibility of working with the government to expand Russia's grain export potential, increase export capacity at its ports and sees potential synergy with other assets.

"We started to look at this topic deeply," he said.

VTB's other stake at a nearby grain terminal is in the Novorossiysk Grain Plant. It owns 33 percent of it directly, and also owns half of state-controlled firm United Grain Company, which owns half of the grain terminal. 

(Reporting by Polina Devitt, Michael Hogan, Polina Nikolskaya and Gleb Stolyarov; editing by Susan Fenton)