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Russian regulator moves to rescue another systemically important lender

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Russian regulator moves to rescue another systemically important lender

The Central Bank of the Russian Federation launched a rescue procedure for PAO Promsvyazbank and placed the lender into the provisional administration of its banking sector consolidation fund.

The regulator also said it will provide financial resources through the banking sector consolidation fund to bolster Promsvyazbank's liquidity, increase its financial stability and ensure continuity of services provided by the lender. The value of financial assistance to be provided was not disclosed.

Promsvyazbank continues to operate normally, fulfilling its financial obligations, the central bank said Dec. 15, adding that there is no need to impose a moratorium on creditor claims. The regulator noted that JSC AVTOVAZBANK, which is controlled by Promsvyazbank following its 2015 bailout, also continues to operate as usual.

Classified as one of Russia's systemically important banks, Promsvyazbank is the country's ninth-largest lender in terms of assets, the regulator said. It is the third-largest private lender to be bailed out by the central bank in the last few months, after Otkritie Financial Corp. Bank and B&N Bank.

An agreement to bail out Promsvyazbank was reached Dec. 14 at a meeting involving the regulator's deputy head Dmitry Tulin and the head of the central bank's banking supervision department, Anna Orlenko, Kommersant said. Dec. 15. Vedomosti reported earlier that the regulator asked the lender to set aside over 100 billion Russian rubles in additional reserves.

The bailout measures will most likely not include Vozrozhdenie Bank, which is also controlled by Promsvyazbank shareholders, Kommersant noted, adding that the bank could be sold to an external investor.