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Report: Russian central bank to recapitalize 3 Otkritie pension funds


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Report: Russian central bank to recapitalize 3 Otkritie pension funds

The Russian central bank will inject another 18 billion rubles into Otkritie Financial Corp. Bank to support three of the bank's pension funds, sources told Reuters.

The Central Bank of the Russian Federation rescued Otkritie in 2017 and said then that it planned to merge the bank with B&N Bank and sell the resulting company afterward, the newswire reported May 21. The central bank previously injected 42 billion rubles into Otkritie-run pension funds Lukoil-Garant, NPF Elektroenergetiki and NPF RGS, the report added.

Otkritie will reportedly receive the aid from the central bank and then channel it to the pension funds. The bank's press office said the aid will be used to replace nonperforming assets held by the pension funds, the newswire wrote.

At the end of 2017, about 5% of the assets held by Otkritie's pension funds were nonperforming, the press office for the three funds told Reuters. With all three funds holding over 600 billion rubles in assets as of January, Reuters said the size of the nonperforming assets could be around 30 billion rubles.

The nonperforming assets could be securities issued by firms that have not defaulted yet but are expected to ask for their debt to be restructured, Yuri Nogin, an analyst ACRA rating agency told Reuters. Nogin added that the 18 billion rubles could be enough to solve any issues regarding NPAs held by the pension funds.

As of May 21, US$1 was equivalent to 61.78 Russian rubles.