Russia's troubled state development bank Vnesheconombank will sell two subsidiaries Globex Bank and Svyaz-Bank to the state-run Deposit Insurance Agency, while the central bank converts a share of its vast debt into a perpetual subordinated loan amid ongoing rescue efforts.

VEB said on January 27 that selling Globex and Svyaz-Bank to DIA "at market value" will help the bank cover RUB212.6bn ($2.7bn) of debt to the Central Bank of Russia (CBR).

VEB has carried Globex and Svyaz Bank since the bail-out in the previous financial crisis of 2008. It was previously granted a deposit of $2bn from the Central Bank of Russia (CBR) to ensure undisrupted operations of Globex, which was forced to halt client withdrawals during the meltdown eight years ago. Svyaz Bank, in turn, was unsuccessfully planned for restructuring into a postal bank in 2010.

Meanwhile, VEB also said other liabilities to Russia's regulator will be "transformed into a perpetual subordinated instrument of the CBR, included in VEB capital calculations".

Citing sources close to VEB, Kommersant daily reported on January 28 that the subordinated loan from the regulator could amount to RUB180bn ($2.3bn).

CBR participation in the VEB bail-out was previously limited to revising the interest on loans granted to the bank, which would result in on-paper accounting gains in profit and capital. However, despite initially seeking to distance itself from floundering development bank, the regulator will actually be testing a new "bail-in" instrument, converting the largest liabilities into perpetual subordinated debt, which will be used to increase the capital of the debtor itself, Kommersant writes.

The move would clear VEB's balance of non-profile assets (Globex and Svyaz Bank), cut the debt, and shield it from defaulting on foreign debt covenants by increasing capital.

The question still remains how the acquisition of two banks from VEB's balance will be financed by the Deposit Insurance Agency, which might also turn to the CBR. However, both the sale of the banks and conversion of liabilities to the CBR are only a small part of total support funding of about RUB1.5 trillion initially requested by VEB.

Reuters reported on January 26 that sources close to the government said a new support plan being devised would cost the budget "no more than $2.4bn this year", a fraction of previous $12bn estimates that Russia's budget can clearly no longer afford amid low oil prices.

"The decision suggests that the finance ministry, which has pushed for belt-tightening, is holding its own in a battle for influence with other parts of the Russian government that had been advocating continued high spending," Reuters wrote.

VEB is not actually a bank as it is not under CBR supervision, and functions as a bank on the basis of a special presidential decree. Its responsibilities include managing Russia's external debt as well as investments by the state pension fund. However, in recent years it has increasingly acted as a de facto state development bank, sinking itself deeper in trouble. VEB backed many investments into big projects like Sochi's development for the 2012 Winter Olympics that have since gone bad, leaving the bank to carry the burden.