UPDATE: Central bank worries about higher state control over banks

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RECREATION HOUSE BOR, Moscow Region, Feb 2 (PRIME) -- The central bank is concerned with high state control over Russia’s banking sector and the regulator is interested in selling off bailed-out banks as soon as possible, Chairwoman Elvira Nabiullina said on Friday.

“Of course, we are worried about a relatively large state share in the banking sector. That is why we intend to sell the banks, which we are currently bailing out, on the market as soon as possible on condition that their business models are effective,” she said. “Generally, we are not interested in expansion of the state.”

She said that the central bank has not discussed the sale of Vozrozhdenie Bank to VTB.

According to media reports, the central bank had requested that the Ananyev brothers, ex-beneficiary owners of Promsvyazbank, sell a controlling stake in Vozrozhdenie Bank until the middle of February. VTB CEO Andrei Kostin said that the bank could consider the purchase of Vozrozhdenie Bank.

Nabiullina said that arrest of a 36.31% stake in Vozrozhdenie Bank will not prevent a sale of its controlling stake.

“I do not think that this will in any way impede the sale and purchase of the shares,” she said. “As far as I know, there are a lot of interested parties.”

The Moscow Arbitration Court arrested the shares on January 21 on request from Promsvyazbank as part of its suit to Netherland’s Promsvyaz Capital B.V. owned by former Promsvyazbank owners Dmitry and Alexei Ananyev and 9 more firms. Promsvyazbank wants to null deals with securities of the bank and companies linked with it, which Promsvyaz Capital B.V., sold to the bank on December 14, 2017, a day before the central bank announced its bailout and imposed a temporary administration.

Nabiullina said the central bank will merge healthy assets of B&N Bank and Otkritie Financial Corporation (FC) Bank, which are undergoing bailouts.

“A decision that Otkritie (FC Bank) and B&N Bank, save for, maybe a share of bad assets, will be merged, such an internal decision has been made,” Nabiullina said, adding that the idea to create a bank for bad debts to spin off poor assets of Otkritie FC Bank is difficult to fulfill but is being discussed.

Bailouts of the banks, as well as Russia’s 10th largest bank Promsvyazbank, started in 2017.

The central bank will not adjust the volume of capital injections in Promsvyazbank, set at 100–200 billion rubles, after deciding to convert it into a bank for the state defense order.

“We will decide to raise capital of the bank on general terms, like we did in previous cases,” she said.

(56.2613 rubles – U.S. $1)

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