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CNBC Interview with VTB Bank President and Chairman, Andrey Kostin, from the World Economic Forum 2019

Following are excerpts from a CNBC interview with Andrey Kostin, VTB Bank President and Chairman, and CNBC's Steve Sedgwick and Geoff Cutmore.

GC: What an introduction for our next guest, Andrey Kostin, President and Chairman of VTB. Andrey, good to see you-,

AK: Good morning. Good morning.

GC: Let me, if I might, just start with the headline here in Davos, and then we can move in to some of the Russian issues, and the headline here is of slower growth in the global economy, Russia's had its own unique issues around growth, since 2014. Can I ask you, are you seeing any of this impact VTB, and what's your view on the-, on that global growth issue?

AK: Well, I think that it's important for Davos, because Davos was always about globalisation, and freedom of trade, and development of cooperation. Of course, what we see now in the world is a lot of conflicts between the different countries, between the different trade, in-, in-, in the area of trade, economy, and-, and just conflict, uh, in-, inside the countries, like we see the growing division in the United States, for example, and continuing conflict between-, between the Congress, the Senate-, and particularly Congress and-, and-, and the President. So, of course, it all raises some concerns about the future of-, of economic growth, whether we'll be in a position, actually, to agree on certain things which will provide further economic growth, how the Brexit issue, for example, will be resolved, and many other things like this.

GC: So you ascribe the-, the weaker sentiment, really, to political risk?

AK: Well, I think, if we talk-, there is certain political issues, of course, quite important, like relationships between China and the United States, between the United States and Russia. Unfortunately, from-, from the meetings I've had, and we are already on the second day of Davos, of course, I-, I've heard the opinion from American, for example, counterparts, that we shouldn't expect, for the next two years, any change of heart, on the part of the American administration, or American congress, regarding Russia or China, so I am afraid we'll have to-, we-, we-, we have a couple of years ahead, when we'll not be in a position to change very much this trend.

SS: Andrey, we've talked about the pressure on Mr Putin, from a very weak poll in trust in his ability economically, we've seen problems in the polls, and as you-, you've alluded to the electoral cycle in the United States, as well. With that as a backdrop, it's very hard to see any rapprochement, or any improvement in relations between the US and Russia, but equally so, what about the relations between Europe and Russia, as well? Because-, and you, yourself, have been subject to various sanctions, your company's been subject to various sanctions, with the US, as well. Can you see any hope, for any improvement at all?

AK: I think we have better chances to improve the relationship with-, with Europe, particularly, particularly if we manage, somehow, to have some progress on the issue of Donbas, for example-,

SS: Mm.

AK: But look at Europe, again, most of the leading countries, they are preoccupied with their own domestic things, like we definitely see that Mrs Merkel, who used to be a leader of Europe-,

SS: Mm.

AK: Is now losing control, probably, to a certain extent, and there's many talks about that she will step down, later this year. You see, of course, Britain, with the Brexit issues becoming very, very hot, I would say, nobody knows how it's going to be resolved, or look at France, where Mr Macron's very much involved in also domestic issues. So, the problem is that it's-, I think it's more and more difficult for Russia to find the counterpart with whom we should agree on certain things.

SS: I-, I think you're right, and-, and I think that, when I see stories, like I saw last week, about German companies potentially facing US sanctions, if they help develop Nord Stream 2, I'm wondering if that increases the anxiety between Europe and Russia, and forces Russia to carry on looking east, with this pivot towards China, and perhaps more South-South trade, as they say.

AK: You know, on the other hand, I think that nobody likes American sanctions, and Europeans, as well. I don't think that the European companies very much like sanctions which they are facing, either on Iran or in Russia. From this point, I don't think that goes in favour of the American administration, for example, but yes, it creates certain-, certain restrictions for development of relationships between Europe and Russia, as well, particularly on the Nord Stream 2-,

SS: Mm.

AK: But the project is still go ahead, as I understand, but of course the future is not quite clear, I agree with this.

SS: Mm.

GC: And clearly there are still unresolved issues in the banking sector in Russia, and the-, the sanctions don't help that situation, a lot of talk that you may step in and pick up Alpha Bank? Can you just confirm or deny? Are you interested? Will that happen?

AK: No, I will deny, because we are not interested. That's a-, that's a-, a big purchase, we don't have-, with the-, with the Basel III, for example, we just don't even have enough capital for this transaction, so that's out of the question. We made three small acquisitions last year, but that's small, local, regional banks.

SS: But would that not be a state sponsored acquisition, bearing in mind your relationship with the state?

AK: No, we are-, we are not sponsored by the state, we-, we-, we should use only our profit for this, so that's not on-, on-, on the agenda for us, that's for sure.

GC: Andrey, thank you for joining us here-,

AK: Thank you-,

GC: And we'll catch up again soon.

AK: Thanks a lot.

GC: Andrey Kostin, President and Chairman of VTB.