Roustam has agreed with the holders of bonds of the Bank “Russian standard” about debt restructuring. That the holders of subordinated Eurobonds have agreed on the terms with the shareholder of “Russian standard” has informed a source in the environment of Carico, was confirmed by a source among the lenders and one of the bondholders. According to one of them, Tariko agreed to increase the size of payments in cash with 10% to 18% of par.
Tariko Tuesday explained that the payment greater amounts of cash may be associated with a number of difficulties. “At a meeting with bondholders last week, I told them that not many can offer due to the highly regulated industry. The Central Bank probably won’t allow me to offer a large cash payout, since it will create several problems: first, reduce the capitalization of the Bank, which is very critical today, and secondly, this money will have to take deposits from our customers that will be negatively perceived by the regulator”, — explained tarika in an interview with Bloomberg on 6 October. He noted that they agreed on the conditions that he proposed in September, with the Bank of Russia, and if they have to change, approval will have to go again.
In early September tarico put holders of subordinated Eurobonds “the Russian standard” faced with a choice: either agree to restructure or loan will be written off. Then the Bank was willing to pay only 10% of the nominal value of securities and accrued interest in cash. The rest of the investors were offered to exchange for a new issue of seven-year securities with a coupon of 13%, which would be paid in cash only after the “Russian standard” will start to bring profit (for two consecutive quarters according to international accounting standards) and/or will begin to pay dividends. As collateral for new Eurobonds, the owner of “Russian standard” Roustam suggested a 49% stake in the Bank.
Quarters of holders of Eurobonds “the Russian standard” has opposed the restructuring, which was requested by the Bank. Their votes were enough to block the deal. Tarika in reply said he was willing to listen to proposals of creditors. The final decision of the securities holders should take at the General meeting, which will take place on 16 October in London.
If the holders of subordinated Eurobonds of the Bank will not agree to the proposed restructuring, the adequacy of base capital of “Russian standard” will go down to 4.5% in November of this year, breaking established by the Central Bank at least 5%, warned the “Russian standard” in a presentation for investors published on Tuesday, 6 October. In February 2016, the Bank will approach the point of insolvency: its core capital falls below 2%, which will lead to automatic cancellation of releases.
According to the presentation of “Russian standard” in this scenario, the capital adequacy ratio N1 by April 2016 will fall to 9.9% — when the Central Bank minimum of 10%, and by the end of next year may breach the level of 2%. When capital is below 2% the Central Bank may take regulatory action to revoke the license or to impose a temporary administration.
If the investors agree to the restructuring, the Bank will be able to reflect profit of 32.2 billion rubles, which will increase the ratio of core capital to 8%. And then next year “the Russian standard” will show a loss of 13.5 billion roubles, but already in the fourth quarter will be released in profit. And in 2017 will return to overall growth of the loan portfolio, will receive an annual profit of 5.3 billion roubles, and will pay to the holders of the income bonds of the first 2.5 billion rubles.