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Bloomberg
More than a year after Russia nationalised three leading private lenders, the magnitude of the losses is starting to take shape and criminal investigations are being opened against former owners and management.
The bad bank that took on some 2 trillion rubles ($30 billion) in non-performing assets from Bank Otkritie FC, B&N Bank and Promsvyazbank still isn’t ready to estimate how much it will ultimately recover. But Bank Trust PJSC’s CEO Alexander Sokolov is trying to manage expectations.
“About half are assets that can be worked with, where you can find a source of funding,†Sokolov said in an interview in Moscow. That means the Bank of Russia may have a harder time recovering much of the 2 trillion rubles it has provided in the lenders’ bailout. Trust will conclude discussions with the central bank about the recovery target by the end of the year, he said.
The central bank expects a recovery rate at the lower end of the 40 percent to 60 percent spread that it is targeting, Deputy Governor Vasily Pozdyshev told journalists. The three private lenders collapsed last year under a mountain of bad debt, much of which was loaned to companies connected to their owners. Sokolov said that multiple criminal cases have been opened agai-nst the banks’ former management and shareholders, with- out naming individuals. Most of them are minor, he said.
The rescue of these banks, treated as systemically important, contrasted with the central bank’s ongoing purge of the financial industry as it seeks to eliminate mismanaged and undercapitalised lenders. Since Governor Elvira Nabiullina took over the regulator in 2013, she has cut number of banks in half, to less than 450.
Even among the salvageable loans that Trust took on, many involved related parties and were structured as sweetheart deals, according to Sokolov. They often included balloon payments due in several years without a reasonable financial model that would allow for the debt to be serviced, he said.