Report: VEB may transfer Globexbank to government – sources

MOSCOW, Dec 19 (PRIME) -- Russian state development bank Vnesheconombank (VEB), which is still grappling with the financial fallout from the 2014 Sochi Olympics, plans to transfer its Globexbank to the state after failing to find a buyer, Reuters reported Tuesday citing three sources close to talks.

VEB has been supported by the state since 2016 as it struggles to restructure soured loans made for the U.S. $50-billion Winter Olympic Games held in the Russian Black Sea resort of Sochi.

VEB, headed by former Sberbank executive Sergei Gorkov since early last year, had been trying to sell Globexbank and another business, Sviaz-Bank, to improve its finances.

But those attempts failed.

Two sources close to VEB and Globexbank, as well as a federal government source, told Reuters the bank was preparing instead to transfer Globexbank to the state federal property agency.

VEB and the state federal property agency did not reply to Reuters’ requests for comment.

Globexbank had 116.6 billion rubles of assets at the end of the third quarter.

Globexbank, Russia’s 54th bank by assets according to Interfax data, and Sviaz-Bank were moved to VEB from private owners under a state-agreed bailout after the 2008 global financial crisis.

The government spent 212 billion rubles on Globexbank and Sviaz-Bank in that bailout.

VEB was the main lender to the Sochi games and has also been involved in other politically-important projects, including in eastern Ukraine.

Some of the Sochi loans had to be restructured as returns on investment missed original forecasts, while the eastern Ukraine has been ravaged by a separatist conflict.

VEB’s financial rehabilitation plan, agreed late in 2015, included the sale of Globexbank and Sviaz-Bank to reduce the burden on the bank.

The transfer decision comes as Russia gets to grips with wider problems in its financial system. The central bank has bailed out three banks in recent months although there is no connection to VEB’s move.

In September, the finance ministry said it would cut support to VEB by a third to 100 billion rubles a year for the next three years.

(58.6940 rubles – U.S. $1)

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