The Russian finance ministry plans to retrieve funds provided to Otkritie Financial Corp. Bank and B&N Bank a few years ago and use them to recapitalize PAO Promsvyazbank, recently selected to become a defense-sector-focused lender, Reuters reported Jan. 31.
The funds in question, amounting to over 80 billion Russian rubles, were provided to Otkritie and B&N Bank in the form of OFZ government bonds as part of Russia's banking sector recapitalization program, which was carried out in 2014 and 2015 via the Russian Deposit Insurance Agency. After the lenders had been bailed out by the Russian central bank in the second half of 2017, the finance ministry asked for the financing to be returned.
The return of the funds has been "in general approved" and will be linked to the process of transferring Promsvyazbank into government ownership as part of turning it into a specialized lender for local arms producers, Russian Deputy Finance Minister Alexei Moiseev said, adding that relevant legislative amendments are expected to be ready Feb. 1.
Promsvyazbank was bailed out by the central bank in December 2017, with the regulator initially estimating the value of financial assistance required by the lender at between 100 billion rubles and 200 billion rubles.
In January, the finance ministry said Promsvyazbank would be transformed into a bank servicing companies from the Russian defense sector, a move aimed at protecting other local companies against potential US sanctions. The lender will be recapitalized during the first quarter and transferred from the central bank into government ownership.
As of Jan. 31, US$1 was equivalent to 56.27 Russian rubles.
