Russian Uralsib Bank gets new owners and $1.3bn bailout package

By bne IntelliNews November 5, 2015

One of Russia's largest private banks, Uralsib, will have an 82% stake acquired by businessman Vladimir Kogan, the former owner of Promstroibank and largest shareholder of the Neftegasindustria holding, the bank said on November 4.

The previous owner of Russia's 26th largest lender Nikolai Tsvetkov will remain a minority shareholder.

The Central Bank of Russia (CBR) has approved the plan to salvage and restructure the bank, under which the Deposit Insurance Agency (DIA) will grant a RUB14bn six-year loan and a RUB67bn ten-year facility (total of $1.3bn) to Uralsib, marking one the biggest bailouts since 2009.

The latest bailout of a top-30 bank was carried out in 2008, when Russia's second-largest VTB Bank took over the Bank of Moscow.

As reported by Vedomosti daily on November 3, together with Kogan the industrial holding AFK Sistema and Alfa Bank were the last remaining contenders to take over Uralsib.

Central bank officials reportedly offered RUB280bn to Alfa Bank to restructure Uralsib, but Alfa rejected the amount as insufficient.

Meanwhile, Kogan plans to recapitalise the bank at 50% to 50% with the DIA. Vedomosti banking sources see Kogan as a favourable investor as he would bring cash to recapitalise and not only tap into DIA funding.

At the same time, he is regarded as lacking the necessary management resources for bailing out and restructuring Uralsib. It is the first time that an individual investor and not another credit institution is picked by the CBR to lead the restructuring of a bank.

On November 2, Kommersant daily reported that Tinkoff Bank is considering acquiring a non-state pension fund (NPF) from Uralsib for RUB1.6bn ($25mn).

Uralsib was looking to raise up to RUB4bn-RUB5bn more capital in 2015 after its latest injection of RUB17.6bn. Apart from the pension fund, Uralisib, which ranks among Russia's top-30 private banks, will sell other non-profile assets.

On October 19, Fitch Ratings downgraded the long-term foreign currency issuer default rating of Uralsib to 'B-' from 'B', and placed the ratings on rating watch negative.

The downgrade was attributed to "further weakening of the bank's capital position, asset quality and profitability metrics".

Fitch believes it became more difficult for Uralsib to "achieve an improvement in performance and capitalisation and a meaningful clean-up of its balance sheet from significant non-core/related-party exposures due to a weaker operating environment".

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