Central bank steps in to save one of Russia's largest financial institutions

30 Aug 17

Russia’s central bank has had to rescue one of the country’s largest financial institutions.

Otkritie, which describes itself on its website as “first among privately-owned banks and fourth by assets among banking groups in Russia”, has been placed under the Bank of Russia’s management.

The central bank did not say how much money it would put into Otkritie, but said its action would improve Otkritie’s financial stability and secure the continuity of its operations, which would continue as normal.

Although the central bank’s action has been widely reputed as a bailout, it insisted this was not the case and said “no bail-in option will be applied” and nor would there be any moratorium on payments under creditors’ claims.

News services have reported that the central bank took at least a 75% stake in Otkritie on Tuesday after the bank suffered a sustained run on its deposits amid worries about its loan portfolio.

Otkritie’s website says it is a universal commercial bank with a stable diversified business structure and strong capital management built up through mergers with more than 10 banks.

Reuters said the central bank's move had “eased market concerns” over other banks in Russia although it highlighted “problems among Russia’s banks and the challenge the authorities face in trying to clean up the sector”.

Bank of Moscow, a mid-sized lender, had to be rescued in 2011 but since then the central bank opted for revoking licences, shutting down more than 200 banks over the past two years, Reuters reported. 

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