Page 53 - RusRPTJuly18

budgets and RUB188bn from the Ministry of Finance (Minfin), and net repayment of RUB27bn to other government entities. The RUB512bn net borrowing from the CBR resulted from RUB780bn provided to Rost Bank and RUB372bn to Trust Bank to repay their interbank borrowings from B&N and Otkritie, respectively, which then returned RUB290bn and RUB273bn back to the CBR. A further RUB100bn was repaid by Promsvyazbank. As regards non-CBR state funding, the largest borrowers in March were VTB group (RUB132bn raised from Minfin and RUB47 from regional budgets), Gazprombank (RUB124bn from budgets and RUB34bn from other government entities) and Rusag (RUB77bn from Minfin and RUB24bn from regional budgets).
By refinancing B&N's and Otkrytie's large interbank exposures to their highly problematic subsidiaries, the CBR assumed these risks. Trust Bank and Rost Bank had negative equity of RUB167bn and RUB413bn, respectively, at end-1Q18, suggesting that the CBR could incur significant losses on these exposures on top of the RUB400bn of impairment reserves related to bank rescues, which it created in 2017. The CBR announced that it would transform Trust Bank into a toxic asset fund accumulating up to RUB1.1 trillion of problematic exposures from other rescued banks, namely Rost Bank, Otkrytie, B&N, Promsvyazbank and the latter's subsidiary Avtovazbank. Trust will not be recapitalised, while the regulator ambitiously plans to recover 40%-60% of the problematic assets.
The sector liquidity surplus (by, which we mean liquidity that banks keep on interest-bearing deposits with the CBR) was RUB2.1 trillion at end-March, down from RUB2.4 trillion at end-February, although it peaked at RUB3.7 trillion during the month. These deposits are mainly placed by Sberbank and foreign banks, while some other large banks remain reliant on government funding amounting to RUB5.3 trillion (excluding Sberbank's RUB0.5 trillion sub-debt from the CBR and RUB1.5 trillion of CBR deposits in banks under rehabilitation) at end-3M18. The largest users of this funding were VTB group (RUB2 trillion, 18% of total liabilities), Gazprombank (RUB0.8 trillion, 15%) and Rusag (RUB0.5 trillion, 19%).
RUSSIA Country Report July 2018 www.intellinews.com