Administrators overseeing the wind-down of VTB Capital have sanctioned payments totalling £32 million to a small group of key employees based in London. The substantial sum was allocated to ensure the continuity of critical operations during the complex administration process.
Substantial Payments for Continuity
The payments, detailed in recently filed documents, were made to a select number of staff deemed essential for managing the firm's ongoing obligations and orderly closure. VTB Capital, the international investment banking arm of Russia's VTB Bank, was placed into administration by the Bank of England in the wake of Russia's invasion of Ukraine and the ensuing sanctions.
The £32 million expenditure highlights the significant costs involved in unwinding a major financial institution's operations, even when its core business has ceased. Administrators from Teneo, the professional services firm handling the process, have emphasised the necessity of these retention payments to prevent a disorderly collapse that could harm creditors and create market instability.
The Administration Timeline and Strategy
VTB Capital PLC entered administration on 4 March 2022, shortly after its parent bank was hit with severe international sanctions. The primary objective shifted from trading to a managed wind-down, requiring specialised expertise to handle complex financial contracts, client assets, and regulatory requirements.
The administrators' strategy has focused on preserving value for creditors by maintaining control over the firm's assets and liabilities. Retaining experienced personnel with intricate knowledge of VTB Capital's books and deals was identified as a crucial component of this strategy, justifying the multi-million pound outlay.
Future Implications and Wind-Down
While the £32 million in staff payments represents a major cost, administrators argue it is an investment in a more efficient and value-preserving wind-down process. The alternative—a sudden exodus of key staff—could have led to greater losses and legal complications.
The administration of VTB Capital remains ongoing, with Teneo continuing to manage the realisation of assets and settlement of liabilities. The episode serves as a stark case study in the real-world financial and operational repercussions of geopolitical events on the City of London's financial landscape. It underscores the expensive and protracted nature of unwinding a sanctioned entity, where specialist knowledge commands a premium even as the business itself is dismantled.
