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September 1, 2017 www.intellinews.com I Page 2
Russia’s central bank takes over troubled lender Otkritie
“The Bank of Russia took a decision to implement measures aimed at improving the financial stabil- ity of FC Otkrytie [sic],” the CBR said in a state- ment, adding it intends to support the bank and allow it to continue normal operations.
The CBR said it will become the bank’s “main in- vestor” using money from the new fund to recapi- talise Otkritie.
The rehabilitation will take place with the par- ticipation of the current owners and managers of the bank, the CBR said, although those people as well as other senior managers have already been removed from operational control after the ap- pointment of the interim administration.
The CBR has not introduced a moratorium on meeting creditor claims, although recently it has become frequent practice in bank bailouts, and no payments from the Deposit Insurance Agency (DIA) are necessary at this point, it said. The bank
Economists tangle over risk of a Greek style collapse in Turkey
expanded, it has driven a surge in credit expansion for non-financial companies. In turn, that has bolstered economic confidence and helped push up the Istanbul stock market to record highs.
As of August 11, loans had risen 13% this year to $522bn, according to Turkey’s banking regulator.
will continue to function as normal, the CBR stressed.
The decision brings almost two months of uncer- tainty that has shaken the entire Russian finan- cial sector to a close. bne IntelliNews revealed on August 11 that market sources were warning the bank was “in trouble”. That weekend the bank’s ATMs stopped working temporarily and deposits started flooding out the door.
Since then, Otkritie has desperately been trying to shore up trust and took a string of measures to raise more cash, including selling down about 85% of its bond portfolio, tapping the CBR repo facility, selling off its bad debt portfolio and tak- ing one unsecured loan from the CBR of an un- disclosed size last week. In all, it is estimated that Otkritie has tapped the CBR for RUB333bn ($5.7bn) in aid, reported Kommersant.
As yet there is no information on how big a hole there is in the bank’s balance sheet. However, it is possible that it could break the previous record set by the Bank of Moscow that had a $9bn hole in its balance sheet and needed a $14bn bailout after it was taken over by VTB in 2011. The bank’s former manager Andrey Borodin fled an arrest warrant in Russia for London where he now lives in a very nice house in Henley.
What’s more, the ‘jet fuel’ provided by the CGF has pushed the country’s loan-to-deposit ratio to a record high.
Borrowers who shouldn’t borrow
When it comes to the question of whether Tur- key has a ‘Greek future’, Charles Robertson, the London-based global chief economist at Renais- sance Capital, has put the cat among the pigeons by telling Bloomberg: “What President Erdogan doesn’t understand is that private sector credit booms without productivity growth always end badly. What is worrisome in Turkey is that with the government credit programme, the companies