Large Russian private bank Uralsib faces bankruptcy prevention measures

BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/46

Nikolai Tsvetkov, the previous majority owner of Uralsib, this week completed the sale of an 82 % stake to Vladimir Kogan, who is known for his successful banking career in the 1990s to mid-2000s and his association with president Putin. The idea of a private individual as the successor owner of a troubled bank is exceptional, but according to the Central Bank of Russia, as well as several private market actors, the most favourable offer was chosen in a process that has been evolving during the year.

Finding a new owner for a minimum of 75 % of Uralsib’s shares was a precondition for the bank to qualify for two recapitalisation credits (a 6-year loan priced at 6 % p.a. and a 10-year loan at 0.5 % p.a.) supplied by the Deposit Insurance Agency (DIA) and financed by the CBR. The combined nominal value of the loans is 81 billion rubles (€1.2 billion). The DIA would have faced a liability of about 100 billion rubles if Uralsib was allowed to go bankrupt.

Uralsib is Russia’s 27th largest bank in terms of assets, although it holds less than 0.5 % of the banking sector’s total assets. In addition, the CBR notes that the actual value of the bank’s assets is notably overestimated due to valuation applied to some of the balance items. Uralsib has posted losses for several years now and its credit rating has been downgraded. Former owner Tsvetkov has poured considerable amounts of his own money into the bank this year.

Show weekly Review 2015/45 Show weekly Review 2015/47