Management of Freight One, Russia’s largest rail freight operator, is falling into the hands of the state-owned VTB Bank. As the state bank takes over the rail company, there is some talk about a possible future consolidation of operators on the Russian market.

Management of the freight operator will be transferred to VTB Bank, reports Russian publication Kommersant. In February, Freight One pledged nearly 70 thousand wagons as collateral to the bank to cover for its parent company’s financial obligations.

The parent company, Aurora Invest, did not hold on to Freight One for long. It acquired the operator in November 2023 for an estimated 220 billion rubles. As part of the deal, writes Kommersant, “promises were made to the parties involved and credits, including VTB”. Now, the bank is “dissatisfied” with the organisation of the deal and is taking management of the company into its own hands. Russian publication Lenpravda calls it a “soft nationalisation”.

Market consolidation

The Russian publication writes that the bank’s acquisition of Freight One is the first step towards market consolidation. A next step could be a merger with asset manager Transfin-M and rail freight operator Atlant, which the bank already controls.

A 2015 plan to consolidate 200,000 wagons under one operator is now also resurfacing. To put the plan into practice, Russian Railways’ freight branch Federal Freight could be taken away from the state operator and merged with Freight One.

If that were to happen, it would merely be a reorganisation of operators under state control now that Freight One is managed by VTB. A Kommersant source also emphasises that a new owner of Federal Freight would be required to use its assets for state purposes right away.