UPDATE2: Russian cbank starts bailout procedures at Promsvyazbank

(Adds details in paragraphs 4–5, last two paragraphs)

MOSCOW, Dec 15 (PRIME) -- The Russian central bank has launched a bailout of Promsvyazbank, 10th largest by assets as of November 1, by using the Banking Sector Consolidation Fund, the authority said in a statement Friday.

No moratorium on creditor demand fulfillment was introduced. Promsvyazbank has continued normal activities fulfilling its liabilities and signing new deals.

The central bank said it will provide money to support liquidity of Promsvyazbank and financial support to guarantee the continuity of service of the bank due to its systemic importance.

Co-owners of the bank Dmitry and Alexei Ananyev said in a statement that the bank is in a constructive dialogue with the central bank. “The bank is in a constructive dialogue with the central bank, operations of all business lines of Promsvyazbank continue.”

The businessmen said that the bailout decision was made after an order by the central bank to raise reserves. They said that unscrupulous actions of competitors, information attacts and the general market situation were the reasons why the bank ended up needing state aid.

Business daily Kommersant reported earlier on Friday citing sources familiar with the situation that the central bank decided to appoint an interim administration at Promsvyazbank. The decision was made on Thursday and the launch of bailout procedures at the bank were not ruled out, the daily reported.

According to Kommersant, Vozrozhdenie Bank will not enter the scope of bailout procedures and is likely to be sold to an investor. The majority owners of the bank decided earlier in 2017 not to merge with Promsvyazbank.

The Ananyevs will probably lose a right to own large stakes in banks and occupy high-ranking positions in them, Kommersant reported.

Business daily Vedomosti reported on Thursday that the central bank demanded that Promsvyazbank raise reserves by about 130 billion rubles. Promsvyazbank denied the report and said that the information concerned a check by the central bank completed in May and that a final report has not been confirmed yet.

In August, Alfa Capital analyst Sergei Gavrilov warned clients of the company about problems at Otkritie Financial Corporation (FC) Bank, B&N Bank, Promsvyazbank, and Credit Bank of Moscow. Since then, the central bank has launched financial recovery procedures at Otkritie FC Bank and B&N Bank.

A spokesperson for Vozrozhdenie Bank said that the bank continues normal operations and has not received any notifications from the central bank.

“Activities of Vozrozhdenie Bank are not subject to influence and do not depend on activities of Promsvyazbank. The central bank sees activities of Vozrozhdenie Bank as those of an independent financial organization, there are no ties of any kind with activities of Promsvyazbank, and there are no claims concerning operations of Vozrozhdenie Bank from the side of the central bank,” the spokesperson said.

(58.7082 rubles – U.S. $1)

End