UPDATE: Russian cbank appoints interim administration at Otkritie FC Bank

(Adds more data in last four paragraphs)

MOSCOW, Aug 29 (PRIME) -- The Russian central bank has introduced an interim administration at Otkritie Financial Corporation (FC) Bank and plans to become its main investor, using funds of the banking sector consolidation fund, the authority said in a statement on Tuesday.

“The Central Bank of Russia has decided to fulfill measures aimed at increasing the financial stability of Otkritie FC Bank… In the framework of these measures, participation of the Central Bank of Russia as its main investor is planned with the use of money of the banking sector consolidation fund,” the central bank said.

The measures will be implemented in cooperation with the current owners and executives of the bank, it will ensure uninterrupted operations and further development of Otkritie FC Bank on the banking market.

No limit on fulfillment of creditor demands is introduced, a mechanism of creditor money conversion into shares, or bail-in, will not be applied.

Employees of the central bank and the banking sector consolidation fund will comprise the lineup of the interim administration.

The bank saw a large outflow of client money in June–July, and its dependence on refinancing operations with the central bank increased.

First Deputy Chairman of the central bank Dmitry Tulin said that the rights of the current shareholders will be restored once the interim administration completes its work but their share in the bank will not exceed 25%. The bailout process in Otkritie FC Bank will take less than a year, he added.

“The financial recovery process with the use of money of the banking sector consolidation fund can be divided into two stages, whose implementation is estimated to take six to eight months, after that the bank will be able to work fulfilling all statutory requirements. For comparison: the process of bailout based on the loan mechanism (used earlier by the central bank) can last from 10 to 15 years,” the authority said.

The charter capital of the bank will be levelled off with its shareholder equity during the interim administration work. If the bank’s shareholder equity is negative, the capital will be reduced to 1 ruble. In this case, the shareholders will lose their ownership rights, the authority said.

Otkritie Holding owns a 66.64% voting stake in Otkritie FC Bank.

(58.5469 rubles – U.S. $1)

End