The Russian central bank could face additional costs associated with the bailouts of Otkritie Financial Corp. Bank and B&N Bank in addition to the 626 billion Russian rubles spent on their recapitalization and the 1.1 trillion rubles earmarked for the creation of a "bad bank" that will hold the lenders' nonperforming assets, the Financial Times reported May 14, citing Otkritie Bank's head Mikhail Zadornov.
The executive noted that the bailout costs incurred by the regulator so far are "just estimates" and that the actual amount is still not known.
"Only in three or four years will we understand how much money in total was invested, how much was returned to the central bank as an investor and how much of it [went] towards closing the holes in the banks' balance," Zadornov was cited as saying. He added that Otkritie and B&N Bank had already paid back most of the 1.1 trillion rubles they had received as liquidity support from the central bank in 2017.
Zadornov also noted that talks had been carried out with the lenders' former shareholders regarding the handover of assets pledged to the banks. He added that Otkritie had passed information regarding the activities of the previous owners to law enforcement authorities, but suggested that any subsequent actions would depend on their willingness to hand over some of their assets.
Following the takeover by the Russian central bank, Otkritie is the only state financial institution that is not affected by Western sanctions and has closed its exposure to such entities as sanctions-hit oil company Rosneft and VTB Bank (PJSC). The lender is now working on building its core banking business, with focus on lending, corporate banking and fee-based products, Zadornov was cited as saying.
Meanwhile, Reuters reported May 11 that the value of nonperforming assets at Otkritie Financial Corp. Bank had stood at 420 billion rubles at the beginning of 2018.
Otkritie had divided its problem assets into legacy assets, which include 310.8 billion rubles worth of nonperforming loans that will be hard to sell, and strategy assets, which are worth 112 billion rubles and could be sold more easily, the newswire said, citing Otkritie's business plan.
The legacy category includes assets linked to Otkritie Holding, PAO Rosgosstrakh and other companies associated with Otkritie's former owners. The second group includes stakes in VTB, payment processor Qiwi plc, and United Wagon Company, as well as other assets.
In 2018, Otkritie's new management plans to reduce legacy and strategy assets to 256.3 billion rubles and 99.3 billion rubles, respectively, according to the business plan cited by Reuters, although the document does not specify how the bank intends to achieve these results, the newswire said.
As of May 14, US$1 was equivalent to 61.78 Russian rubles.
