The Russian central bank estimates its losses from bank bailouts carried out under the financial recovery mechanism introduced in 2017 will reach between 750 billion Russian rubles and 1.4 trillion rubles, Vedomosti reported Aug. 6, citing the regulator's deputy head Vasily Pozdyshev.
The financial recovery mechanism, which involves the Russian central bank acting as an investor in bailed-out banks via its banking sector consolidation fund, was used during the 2017 bailouts of Otkritie Financial Corp. Bank, PAO Promsvyazbank, National Bank Trust PJSC and several other lenders.
The value of all assets covered by the bailouts amounted to 7 trillion Russian rubles, including 2.4 trillion rubles worth of bad and noncore assets, which were purchased from the bailed-out banks by the regulator and transferred to National Bank Trust, which now operates as Russia's bad bank. Additional 300 billion rubles worth of bad assets are still held on the balance sheet of Otkritie, according to Pozdyshev.
The central bank expects to recover 965 billion rubles worth of bad assets, or around 40% of the 2.4 trillion ruble total, and plans to lower its losses further by suing the former owners of bailed-out banks for damages. Depending on the outcome of the ongoing and future lawsuits, the regulator estimates it could recover up to 70% of the bad assets value, Pozdyshev was cited as saying.
In addition to financing the buyouts of bad assets and their transfer to Trust, the regulator spent around 806 billion rubles propping up the capital of Otkritie, Promsvyazbank and other bailed-out lenders. It hopes to recover the funds fully or partially when it sells the banks on the market, Vedomosti noted.
Market analysts cited by the newspaper are doubtful whether the central bank will be able to recover between 40% and 70% of the bad assets' value or recoup the costs associated with the recapitalization of the bailed-out banks during their sale. Reuters reported in February, citing calculations put together by bad bank Trust's managers, that the central bank could only recover 20% of the 2.4 trillion rubles worth of bad assets transferred to Trust.
As of Aug. 6, US$1 was equivalent to 65.26 Russian rubles.