The 2017 transfer of JSC Bank DOM.RF to JSC DOM.RF Russia Housing & Urban Development Corp. generated 80.5 billion Russian rubles worth of losses for Russia's treasury due to deficiencies in the legal and regulatory framework governing such transactions, according to the Accounts Chamber of the Russian Federation.
Bank Dom.RF, formerly operating as Bank Rossiysky Capital, was bailed out by the Russian central bank in 2009 and was overseen by the Russian Deposit Insurance Agency until the end of 2017. It was transferred to Dom.RF Corp. to focus on the provision of mortgage loans and financing of real estate and housing projects. The financial recovery procedure for Bank Dom.RF was extended until 2025 due to its merged with JSC Sotsinvestbank, also bailed out by the central bank a few years ago.
The Accounts Chamber said that during the 2017 transaction, the DIA transferred the lender to the federal treasury at its book value of 84.14 billion rubles, but the transfer from the treasury to Dom.RF was carried out at a market price of 3.63 billion rubles, which was determined by a professional appraiser.
The chamber also said Bank Dom.RF continues to generate losses, with its financial recovery procedure having cost the Russian state 164.4 billion rubles since its launch in 2009. The lender will need financial assistance from the parent or the federal budget in 2019, otherwise it may not be able to effectively participate in one of Russia's key housing projects.
Russia's Construction and Housing Minister Vladimir Yakushev recently said the lender and its parent would need additional funding worth 160 billion rubles to finance housing projects and could receive 40 billion rubles in 2019 and the same amount in 2020.
As of May 21, US$1 was equivalent to 64.39 Russian rubles.