Posted on Feb 12, 2019
Russia will dramatically cut its estimate of the sum it expects to recover from a “bad bank” set up after the collapse of three major lenders, according to three sources familiar with new calculations being prepared for the central bank, Reuters has reported.
The central bank has spent over $40 billion bailing out Otkritie, B&N and Promsvyazbank since 2017. It had hoped to recover between 40 and 60% of the value of the 2 trillion rubles ($30.45 billion) of assets that were transferred to Trust Bank, the bad bank, in the rescue deal.
But the central bank now expects to receive only 20% of the value, according to the calculations being put together by the managers of Trust Bank, the sources said. The estimate is being downgraded because the assets were overpriced in the initial calculations, they said.
The central bank is Trust Bank’s main shareholder. It hopes to recover the money through asset sales and loan repayments.
A Trust Bank spokeswoman told Reuters that the recovery rate was still being discussed. The central bank did not reply to a request for comment.
“The real recovery rate will hardly exceed 20%. It will likely be lower,” said one of the sources, who is familiar with the central bank’s new calculations. “These assets were initially overpriced.”
This downward revision to the estimate is likely to further erode public trust in the central bank, and also seems to point to more weakness in the banking sector, which is suffering heavily from the fallout of Western sanctions over Moscow’s annexation of Crimea from Ukraine in 2014 and the sharp fall in oil prices.
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