The Central Bank of the Russian Federation will provide 456.2 billion Russian rubles to recapitalize Otkritie Financial Corp. Bank by purchasing additional common shares to be issued by the lender, currently operating under the temporary management of the regulator's banking sector consolidation fund.
The funding will allow the bank to cover the 189.1 billion ruble difference between the value of Otkritie's assets and liabilities, and to provide financial assistance of 42.2 billion rubles to insurer PAO Rosgosstrakh and of 42.9 billion rubles to nonstate pension funds that are part of Otkritie Group. In addition, 182 billion rubles will be allocated to Otkritie Financial Corp. Bank as the parent organization of the group.
The measures will ensure that the bank complies on a stand-alone level with capital adequacy ratios and additional buffers, including the buffer for Russian systemically important banks, from Jan. 1, 2018, the regulator said Dec. 7.
Otkritie will also present a plan in January for the repayment of funds received from the central bank in the form of deposits to provide the lender with liquidity. In the summer of 2017, the central bank provided Otkritie with over 1 trillion rubles to keep it afloat, and the bank still owed the regulator 715.9 billion rubles as of Nov. 1, Vedomosti noted Dec. 7.
The recapitalization measures do not include financial assistance for National Bank TRUST PJSC, which became part of Otkritie Group after its 2014 bailout. Until a new financial rehabilitation plan is approved for Trust, the lender's negative equity will be taken into account when calculating Otkritie's mandatory ratios at a group level.
The Russian central bank launched a bailout procedure for Otkritie at the end of August, with the lender's capital needs originally estimated by the regulator at between 250 billion rubles and 400 billion rubles. At the end of November, Otkritie Bank's capital was reduced to 1 ruble and its subordinated debt was written off to prepare the ground for the recapitalization.
As of Dec. 6, US$1 was equivalent to 59.13 Russian rubles.