UPDATE 3: Cbank to bail out B&N Bank, sets no creditor demand moratorium

(Adds more data in last five paragraphs)

MOSCOW, Sep 21 (PRIME) -- The central bank has decided to bail out Russia’s 11th largest bank B&N Bank and its affiliate Rost Bank, setting no moratorium on creditor demand fulfillment, the authority said in a statement on Thursday.

“In the framework of these measures, participation of the Central Bank of Russia as the main investor is planned with the use of money of the fund for banking sector consolidation,” the central bank said.

Interim administrations including employees of the central bank and of the banking sector consolidation fund were appointed at B&N Bank and Rost Bank.

The bank and its affiliates Rost Bank, B&N Bank digital and Uralprivatbank will continue to operate normally, fulfilling their liabilities and signing new deals. The central bank will be ensuring the continuity of their activities, it said.

The central bank decided to provide financial aid to B&N Bank to support its liquidity on Wednesday. Earlier that day, co-owner of B&N Bank Mikail Shishkhanov said that the bank was in active negotiations on its bailout with the central bank and admitted that the bank did not cope with troubles of its affiliates Rost Bank and MDM Bank.

Shishkhanov told channel Rossiya 24 that the financial recovery of the bank will take three to eight months. “The process, I would not call it a bailout, it is rather recovery, these are different notions, the process itself (will take) from three to six to eight months. This is a serious process still.”

He said that some of the assets of B&N Bank can be sold in case of need. “The bank will be conducting its operating activities at top efficiency. If we need to sell we will sell, if we do not need we will not. The bank has many assets; perhaps, it is one of the most capitalized banks from the point of view of assets.”

According to Shishkhanov, market nervousness and rumors on the Internet that appeared after the central bank launched bailout of Otkritie Financial Corporation (FC) Bank were among the reasons of the current troubles in B&N Bank.

He also said that the development of Internet technologies caused a decrease of commercial real estate prices, which also caused issues in the bank.

Olga Ulyanova, senior credit expert at Moody’s, said that the bailout of B&N Bank and Rost Bank can prevent a significant liquidity outflow. “The bailout is a good piece of news for depositors and senior creditors of B&N Bank and banks in the group. At the same time, this measure will somewhat soothe depositors and senior creditors of other banks, preventing a significant liquidity outflow.”

Presidential spokesman Dmitry Peskov said that the central bank does not need to discuss its activities with the Kremlin. “The activities of the central bank require no discussion. The central bank fully controls the situation in terms of procurement of stability in the banking sector.”

Head of the Association of Russian Banks (ARB) Garegin Tosunyan told PRIME that the central bank has enough money to bail out even 20 large banks.

End