Promsvyazbank could take over Moscow Industrial Bank together with bad assets

The Russian central bank decided not to transfer Joint Stock Commercial Bank Moscow Industrial Bank noncore and nonperforming assets to Russia's bad bank National Bank Trust ahead of the former's planned takeover by Promsvyazbank PJSC, Kommersant reported Feb. 17.

The central bank bailed out Moscow Industrial Bank in 2019, and Russian authorities later decided the bailed-out lender will be taken over by Promsvyazbank, a state-controlled lender specializing in servicing Russia's defense sector. Under the initial deal scenario, the noncore and nonperforming assets of Moscow Industrial Bank were supposed to be transferred by August 2021 to National Bank Trust, which was supposed to receive 24.3 billion rubles from the central bank to finance the transfer.

However, the central bank is now reworking the terms of the deal with Promsvyazbank, and the parties are discussing the possibility of the latter taking over Moscow Industrial Bank together with its bad assets, according to Kommersant.

Promsvyazbank representatives told the newspaper the planned takeover of Moscow Industrial Bank will be carried out in a format that will not have a negative impact on Promsvyazbank's financial performance, including its capital levels. Analysts cited by the newspaper believe the tweaked deal may require Russian authorities to provide a capital boost in order for Promsvyazbank to maintain its capital ratios at the necessary level following the transaction.

As of Feb. 18, US$1 was equivalent to 77.14 Russian rubles.