Central Bank is negotiating with the creditors of the Bank “Peresvet” on the terms of conversion of debt into equity, said several bankers familiar with the situation in the Bank of the ROC. Another source close to the Central Bank, does not exclude that improvement of “overexposure” can take on several banks, lenders, holders of its bonds. “The consortium idea can be justified if it used the mechanism of bail-in,” he says.
The mechanism of bail-in is a procedure in which the rescue of troubled banks involved bondholders and depositors. The claims of creditors are converted into subordinated loans (payments on such loans after payments on all other debts) or the authorized capital to eliminate the resulting holes in it. Thus, the creditors become shareholders of the Bank and get the opportunity after its financial recovery to bring back my money, wrote earlier .
CB discusses this procedure in respect of “overexposure” with several banks, including with Sovcombank and “FC Opening”, said representatives of the two companies ‘ creditors. According to them, both of these banks that are large holders of bonds, “Peresvet”, study the situation in the Bank of the ROC.
In a press-service “FC Opening” refused to comment. On condition of anonymity, the representative of the Bank says they have not received specific proposals from the Central Bank, but confirms that talks about a possible bail-in. “It is clear that we, like other creditors, I do not want to lose their money, so we are in talks with the Central Bank, but specific conditions from the regulator yet,” he said.
In a press-service of Sovcombank declined to comment. A source close to top management of the Bank has not confirmed this information. “We do not plan to sanitize the “Peresvet”, as the Bank has no experience with loans to construction companies,” he said. According to him, the Central Bank, most likely, will not allocate funds for the rehabilitation of “Peresvet”.
The Bank of Russia intends to allocate larger loans to support the “Peresvet”, confirms a top-the Manager of another Bank-the lender. “Not yet known the exact size of the hole, the valuation of assets in the Bank isn’t finished yet. In addition, while the regulator has not agreed with the major creditors on the terms of conversion of their claims into shares of the Bank,” he explained.
Previously, the creditors involved in the negotiations with the Central Bank, said that the size of the hole in the capital of “overexposure” can be from 30 billion to 50 billion rubles. “This variation is explained by the fact that the Bank actively invested in construction projects. To give them an accurate assessment of the Central Bank is very difficult,” — said the banker familiar with the Bank’s statement. According to him, “Peresvet” could invest in development projects up to 40 billion rubles. As previously mentioned , there are active lending projects, the construction industry could cause problems at the Bank, reported the Central Bank.
According to representatives of the largest creditors of “overexposure”, the majority is ready to meet the Central Bank, if it decides to carry out rehabilitation by the biggest lenders through the conversion of Bank debt in front of them in stock. “If there’s a senior partner who will be willing to restore the health of “Relight”, I think, and we and the other creditors will take part in a bail-in. The proposal to convert debt into equity looks reasonable,” says a source close to the Bank of the BIN Group Mikhail Shishkhanov. The representative of another major creditor Bank “Peresvet” stated that “in the case of bail-in the Bank will do what will solve the regulator”.
According to statements of the Bank “Peresvet” on his accounts, placed the funds structure “inter RAO UES” (“inter RAO electric power plants”, “RAO ES of East, inter RAO Engineering”, etc.), and also “RusGidro”. The Board of Directors of both companies included the head of “Rosneft” Igor Sechin. Previously, the newspaper “Kommersant” with reference to sources reported that the role of the turnaround can be an all-Russian regional development Bank (RRDB), which controls the Corporation “Rosneft”.
The representative of “inter RAO” declined to comment. Press Secretary of “Rosneft” Mikhail Leontyev November 3, did not comment on the reorganization of the Bank “Peresvet” with the possible participation of the world Bank. A source in “Rosneft” reported that the Central Bank had not received orders to sanitized the Bank “Peresvet”. According to him, the Bank does not really want to deal with this readjustment. If the corresponding order is not received, the owners of the Bank the initiative will not be exercised, he added.
Senior Director financial institutions Fitch Ratings Alexander Danilov says that in case of application of the mechanism of bail-in can be a lot of difficulties. For example, agree whether the other lenders to assume an additional burden, if not all will support the decision on the conversion of debt into shares, he says. In addition, the analyst specifies, if the hole is more capital “Peresvet”, the part of money lenders will be charged immediately, and part — converted into equity with uncertain prospects. “To return the money then will be either through dividends or selling the stock “Peresvet,” adds Daniel.
In Russia on the introduction of the mechanism of bail-in for the first time called the representatives of the Ministry of Finance. At the end of 2015, Deputy Finance Minister Alexei Moiseyev said that the Ministry was studying the possibility of introducing compulsory conversion of large deposits (from RUB 100 million) in the capital of troubled banks to financial recovery. These proposals, the MOF worked together with the Central Bank, said the official. He also added that the introduction of bail-in will increase the range of options and tools for the Central Bank and ASV in the case of the failure of a Bank.
That Central Bank is considering the possibility of introducing a bail-in, said the head of the Bank of Russia Elvira Nabiullina. In an interview to “Interfax” she said she sees the benefits. “In some cases it is due to the participation of creditors will not revoke your license, and save the Bank with the prospect of growth of solvency,” — said Nabiullina. So far, Russia had only two cases of bail-in — Fundservicebank and the Bank “Taurian”. In both the claims of the creditors were selectively converted into shares.
Problems at the Bank “Relight” became known in early October, when the international rating Agency Fitch announced that it had given loans to companies with no real assets. The situation was complicated after it became known about the disappearance of the Chairman of the Board of the credit institution Alexander Shvets. On 21 October, the Central Bank introduced the Bank “Peresvet” and an interim administration declared a moratorium on payments to depositors and creditors.
waiting for the official comments of the Bank and the world Bank.
With the participation of Igor Orlov