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Report: Russian finance minister warns Sberbank, VTB on 'toxic' defense loans

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Report: Russian finance minister warns Sberbank, VTB on 'toxic' defense loans

Russian Finance Minister Anton Siluanov warned that PAO Sberbank of Russia and JSC VTB Bank will be at risk of new U.S. sanctions if they do not transfer their defense sector loans to PAO Promsvyazbank, recently picked by the Russian government to service local weapon makers, Vedomosti reported March 1.

Siluanov noted that loans issued to companies hit by Western sanctions are toxic and could hurt the two state lenders.

Sberbank has not decided as yet whether it will transfer the loans to Promsvyazbank, the lender's deputy head Alexander Morozov recently said. Kommersant wrote in February that Sberbank and VTB Bank support the off-loading of loans to Russian defense-sector companies to a specialized lender, but they are against the accompanying transfer of capital.

The Russian finance ministry is preparing a bill establishing a procedure for the transfer of assets to Promsvyazbank, Vedomosti noted, adding that the transfer will be voluntary. Siluanov earlier estimated that up to 1 trillion rubles worth of defense-sector loans could be transferred to Promsvyazbank from other lenders.

As of March 1, US$1 was equivalent to 56.80 Russian rubles.