15 Dec 2017 19:37

Promsvyazbank financial assessment, recapitalization could take 3 months - CB

MOSCOW. Dec 15 (Interfax) - A financial assessment and the recapitalization of Promsvyazbank could be completed within three months due to the provisional administration immediately transferring management functions to a management team from the Banking Sector Consolidation Fund (BSCF), Central Bank Deputy Governor Vasily Pozdyshev told reporters.

"A provisional administration of the BSCF is working at Promsvyazbank and will start to take all necessary measures to assess the bank's financial state and for its recapitalization. We expect these measures will be completed fairly quickly, within three months," Pozdyshev said.

This is connected primarily with the immediate transition to the second financial rehabilitation stage - Promsvyazbank has been placed directly under the day-to-day management of the BSCF Management Company's provisional administration.

"The less time the bank spends under provisional administration, the less stress for the bank itself, its employees and customers," Pozdyshev said.

He also said the CB estimated Promsavyazbank would need 100 billion-200 billion rubles in recapitalization. "The lower end is 100 billion rubles, but that's the best-case scenario. The more realistic scenario is 200 billion rubles. The provisional administration might find something else - these are preliminary estimates," Pozdyshev said.

He also said Promsvyazbank has this week provisioned 104 billion rubles but needed to provision 100 billion rubles more.

Its equity was 156 billion rubles, but this had fallen as a result of the 104 billion rubles in provisions, he said.

The Central Bank on Friday said it had approved a plan for its participation in measures to prevent the bankruptcy of Promsvyazbank.

As part of the measures aimed at increasing the financial stability of the bank and ensuring its continuous operations, the CBR plans to participate as an investor using money from the Banking Sector Consolidation Fund (BSCF). The CBR said it will provide funds for PSB to maintain its liquidity. LLC BSCF Management Company has been appointed as the temporary administration to manage PSB effective December 15.

"The bank continues to work as usual, meeting its obligations and conducting new transactions. A moratorium on meeting creditors' claims is not being imposed. The Bank of Russia will provide financial support to the bank and guarantee the continuity of its operations, taking into account the systemic importance of the bank," the CBR said.

Avtovazbank, the financial turnaround of which is being handled by PSB, "continues to operate normally and serve clients," the CBR said.

Promsvyaz Capital B.V., which is owned by brothers Alexei and Dmitry Ananyev, owned 50.03% of Promsvyazbank, the European Bank for Reconstruction and Development owned 11.75%, and the Buduscheye, Safmar and Doverie non-state pension funds constituting a group of entities owned 10%, 9.99% and 9.99% respectively.

Sources told Interfax that the pension funds sold their stakes before the bailout was announced. Credit Bank of Moscow had the right of disposal over 8.58% of Promsvyazbank shares which it received in a repo deal. CBM said in a statement on Friday evening that it had closed the repo deal and pulled out of Promsvyazbank as of December 15.

Promsvyazbank was Russia's 10th largest bank by assets at the end of Q3 2017, according to the Interfax-100 ranking prepared by the Interfax Center for Economic Analysis. The Central Bank ranked it 9th with 1.3 trillion rubles in assets on September 1.