VTB is not ruling out the option of transforming its Ukrainian subsidiary - VTB (Ukraine) - into a financial company, and will make a final decision on the subsidiary's fate before the end of 2017, VTB Chairman Andrei Kostin told journalists on the sidelines of the Association of Russian Banks congress.

"There are two paths: the bank sale path, the path of gradually reducing the balance sheet, perhaps, transformation into a financial company; a new law in Ukraine has been approved. We will see… Overall we would like to arrive at one of the two decisions by the end of the year," Kostin said, emphasizing that VTB wants to transact "a truly good deal" with the Ukrainian subsidiary.

VTB (Ukraine) is conducting normal operations, and has not halted or limited client operations and payments, Kostin said.

Any asset sale in Ukraine will entail a discount, he said.

VTB has yet to determine the volume of additional reserves it will set up for the Ukrainian subsidiary. The size of the reserves will depend on the results from the working group on loan collection and sale of collateral received, particularly real estate.

The sale of another VTB subsidiary in Ukraine, BM Bank, is in the concluding stage. "It is the final stage there. Some reconciliation is already underway. The deal is not that big," Kostin said.

He also said VTB is not worried about VTB (Ukraine) being illegally seized by force. "We do not fear that, although we allow there is such a possibility," he said.

In addition, Kostin said VTB would make use of the ability proposed by the Central Bank to postpone creation of reserves for operations with Ukrainian subsidiary banks for three years.