The Russian government has a new cheaper rescue plan for the struggling state-owned development bank VEB that will cost only a couple of hundreds of billion rubles this year rather than the RUB1 trillion ($12bn) that was previously deemed necessary.

Reuters reports that sources close to the talks said the new plan would cost the budget "no more than $2.4bn this year", a fraction of previous estimates that the budget can clearly no longer afford, two officials involved in the discussions said.

"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 really a bank as it is not under the supervision of the Central Bank of Russia (CBR) 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 acted more and more as a de facto state development bank and that is what has caused the trouble. VEB backed many of the investments into big projects like Sochi's development for the 2012 Winter Olympics that have since gone bad, leaving the bank to carry the can.

According to experts, the bank has over RUB1 trillion ($12.6bn) of bad debt and will struggle to meet its foreign debt repayments of about $900mn due this year, Reuters reports.

The previous plan was to simply recapitalise the bank using budget funds. But with the state's finances in disarray thanks to the tumbling cost of oil, this could have added a couple of percentage points to the federal budget deficit that was already unlikely to meet President Vladimir Putin's dictum to not exceed 3% of GDP this year.

Under the new plan, VEB will sell liquid assets such as bonds this year and any losses it makes on these will be compensated from the budget, a senior official source and two officials from the ministry of finance told Reuters, although a final decision has not yet been made.

The whole operation has an estimated cost of between RUB100bn and RUB200bn in 2016, one of the sources said.

To put that into context, the budget deficit is expected to be on the order of RUB1.7 trillion to RUB4 trillion if oil prices stay at $30 per barrel. The state has already allotted RUB2.5 trillion from the sovereign reserve fund to top up funds to cover the budget, but now it seems likely Russia's entire rainy day reserve of some RUB8 trillion might be deployed this year. In this climate, adding another trillion rubles to help one bank was not palatable to the government while RUB100bn is manageable, hence the hunt for a dodge.

"The new bailout scenario will not be such a huge burden for the budget, although today it is difficult to predict VEB's market losses", one of the finance ministry sources said.

Government officials have declined to comment on the report.

The new scenario will focus on selling VEB's liquid assets. It has RUB600bn in cash and liquid bonds, which is 15% of its total assets. It also owns equities worth RUB200bn, Reuters reports, citing the Fitch rating agency.

VEB's capital ratio is well above the 8% required by the CBR. However, it has to make provisions for lending to Ukrainian borrowers, and for its Sochi-related lending, worth between RUB500bn and RUB600bn, according to Fitch estimates, which could take the bank's mandatory capital to below the minimum capital requirements of 8%. However, as the bank is not under the CBR supervison due to its special status, in theory these rules don't apply, even if they remain prudent, and may be ignored.

The scheme is a dodge and nothing more as at the end of the day the bank's bad loans will remain on its book and will have to be dealt with eventually.