Ailing Russian lenders that are being rescued by the Central Bank of Russia (CBR) through its Banking Sector Consolidation Fund (BSCF), lost nearly RUB458.3bn in July-September, the CBR announced on October 25. Financial Corporation Otkritie lost the largest amount at RUB255bn, followed by Rost-bank from the Binbank (B&N) group with RUB84bn and Binbank with RUB34bn. 

Otkritie went bust in late August, followed by Binbank in early September. The CBR provided a RUB380bn bailout loan to Otkritie and an unspecified loan to Binbank. The collapse of Otkritie is the third most expensive collapse of a Russian bank in modern history, after state-owned development bank Vnesheconombank (VEB) needed a $16bn bailout in 2016, and the Bank of Moscow that had a $9bn hole in its balance sheet and was taken over by the state-owned VTB group in 2011. In fourth place was the collapse of Vneshprombank, which folded late in 2015, with a RUB215.9bn ($3.6bn at average 2015 exchange rates) hole in its balance sheet.

The cost of bailing out failing banks this summer saw the sector’s profits plunge by RUB322bn ($5.6bn), the first fall in the sector’s profits for years.

To be eligible for funding from the BSCF, Otkritie's capital will have to be increased to RUB1, which the CBR will most likely do.

Earlier in October, the CBR and the temporary administration of Otkritie called on customers to reopen their deposit accounts at the bank, which some industry players claimed was unfair competition.

Both Otkritie and Binbank belong to the so-called Garden Ring banks, the leading commercial banks that have been included on the CBR’s “strategically important banks” list. They have all come under increased pressure since the spring as the CBR tightened its supervision of the sector. Problems first surfaced in June when Russia’s new domestic ratings agency Analytical Credit Rating Agency (ACRA) downgraded Otkritie to BBB, which precluded it from holding state money, like pension funds.