Cbank approves plan to prevent Moscow Industrial Bank bankruptcy
MOSCOW, Jan 22 (PRIME) -- Russia’s central bank has approved a plan of measures to prevent bankruptcy of Moscow Industrial Bank and assigned the functions of temporary administration of the bank to the management company of the Banking Sector Consolidation Fund, the regulator said on Tuesday.
The priority measures include provision of the central bank’s funds to the bank to support liquidity. The central bank’s board of directors decided to guarantee the continuity of Moscow Industrial Bank’s operations during implementation of the plan.
Moscow Industrial Bank continues to work as usual fulfilling its obligations and making new deals, the regulator also said. No moratorium on satisfying creditors’ claims has been introduced.
Central Bank Deputy Chairman Vasily Pozdyshev told reporters that Moscow Industrial Bank had been suffering from operating losses for four years, and the accrued loss amounts to at least 13 billion rubles, or about half of capital. The gap between assets and liabilities stands at about 60–100 billion rubles, he said.
“The bank was too focused on lending money to companies, its loan portfolio stands at 216 billion rubles, of which corporate loans account for 183 billion rubles and loans provided to individuals amount to only 14 billion rubles…These 183 billion rubles of loans issued to companies are the major problem zone, as bad debts and potentially bad debts account for 123 billion rubles of the sum,” he said.
The regulator sees no criminal schemes of withdrawing money from the bank in the form of loans issued to companies. The authority also has no plans to transfer all the bank’s bad debts to National Bank Trust for now, but it will depend on valuation and prospects of these assets, he pointed out.
The regulator may issue up to 77 billion rubles of loans to Moscow Industrial Bank to support liquidity in case of a possible temporary outflow of client money, even though the central bank does not expect a serious outflow to happen. “I don’t think that the temporary outflow will exceed 10–15 billion rubles,” Pozdyshev said.
The bailout of the bank would take at least six months and at most one year, he said.
(66.3634 rubles – U.S. $1)
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