Investors have enjoyed a good run with Sberbank, darling of EM lenders, and TCS. However, the picture is not so rosy for other parts of the system.
The Bank of Russia said it will spend a record 456 billion rubles ($7.7 billion) to rescue Bank Otkritie FC. This surpasses VTB’s rescue of Bank of Moscow and will be Russia’s largest ever bank bailout.
Resources will include fresh capital as well as a Balance Sheet hole for the bank as well as capital for pension funds linked to the group.
B&N Bank PJSC was nationalised in September.
The central bank says that it plans to sell these nationalised assets on the market after the clean-up. That has been met with a certain amount of scepticism by the market given banks have plenty of challenging priorities at this juncture.
The regulator hopes to recoup part of the bailout money from Otkritie’s former shareholders.
The capital will bring Otkritie into compliance with new capital adequacy standards that take effect next year. But more capital may be needed.