Russian central bank steps in to rescue troubled lender Otkritie
Bank of Russia says it is stepping in to save the country’s 8th largest lender, Otkritie, amid fears over its stability following a sharp drop in customer deposits in recent months
Moscow: Russia’s central bank said Tuesday it was stepping in to save the country’s eighth largest lender, Otkritie, amid fears over its stability following a sharp drop in customer deposits in recent months.
The central bank said in a statement that it planned to become the bank’s main investor and was taking measures to increase Otkritie’s “financial stability.”
Vedomosti business daily reported that this is the “biggest case of a bailout in the history of the Russian banking sector,” as well as the first use of a new consolidation fund recently set up by the central bank and signed into force by President Vladimir Putin earlier this year.
Otkritie “will continue to work as usual,” the central bank said.
The central bank would “provide financial support to the bank, guaranteeing the continuation of its activities,” the statement said.
It said that the measures were being taken “in cooperation with the acting owners and management of the bank.” It said it is not introducing a moratorium on creditors’ demands.
Otkritie says on its website that it is the largest private bank in Russia, with 412 branches and 3.6 million private clients.
Vedomosti reported that the bank haemorrhaged clients in June after its rating was lowered by a Russian rating agency and it lost the right to work with state companies and pension funds.
In June to July, customer deposits contracted by 435 billion rubles ($7.398 billion), or 18% of the bank’s liabilities as of 1 June 2017, Moody’s Investors Service said in a research note on 17 August.
Otkritie borrowed 333 billion rubles from the central bank, Vedomosti reported.
One of Russia’s most high-profile banks, it has used Cristiano Ronaldo in television advertisements and sponsors a football stadium in Moscow that carries its name and will be used for World Cup fixtures next year.
It was founded in 1992. It is the eighth largest bank in terms of the size of its assets, the central bank said.
Vedomosti reported, however, that it is Russia’s seventh largest bank with assets of 2.45 trillion rubles ($41.67 billion).
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