PRESS: Cbank orders 20 bln rbl more reserves for Orient Express Bk

MOSCOW, Jan 16 (PRIME) -- Russia’s central bank has issued an order for Orient Express Bank to form additional reserves of about 20 billion rubles after an inspection, Kommersant business daily reported on Wednesday quoting sources.

The regulator finished the inspection on August 30, 2018, and issued the order in December 2018. A source told Kommersant that Orient Express Bank launched a program to improve its financial condition on October 1, 2018 and created 6.8 billion rubles of additional reserves, so it has to form only about 13 billion rubles of reserves more.

“Under the schedule of reserves creation, the bank will earn about 750 million rubles a month in 2019 and in the first half of 2020. The bank will direct almost the entire profit to reserves. Thus, the bank will create provisions against all bad assets using only profit,” the business daily said.

The bank also planned to issue 5 billion rubles worth of shares to comply with all regulatory ratios and have excessive capital. According to three sources, both the key owners of the bank – Baring Vostok funds and businessman Artyom Avetisyan – agreed with Central Bank Chairwoman Elvira Nabiullina to carry out the issue in April 2019.

A Orient Express Bank representative told the business daily that the bank developed a schedule to create additional reserves for the next 18 months and coordinated it with the regulator in December 2018. Orient Express is a profitable bank and will fulfill the plan. The bank sees its net profit at about 10 billion rubles in 2018 and at about 15 billion rubles in the next 18 months, the person said.

(67.0820 rubles – U.S. $1)

End