Russian Regional Development Bank (VBRR), a subsidiary of Russia's Rosneft oil major, now controls 99.99% in the capital of troubled "church bank" Peresvet, after acquiring an additional share issue of the bank, TASS reported on June 23.

This is Russia's first case of bail-in where the failed bank is supported with its creditors' funds, a mechanism praised by Fitch Ratings in the beginning of 2017.

The Central Bank of Russia (CBR) pledged to provide RUB66.7bn (€1bn) to VBRR for covering holes in Peresvet's capital, while another RUB69.7bn was to be provided by creditors of the "church bank" by acquiring 15-year convertible bonds.

According to earlier reports, one of the major buyers of the bonds was Russian energy utilities major InterRAO.

Peresvet, one of the top 50 Russian banks, has been under the control of the CBR since the end of November 2016. The bank reportedly held deposits of major state-controlled corporations and Kremlin-affiliated VIPs, including RUB18.7bn in deposits from InterRAO.

Notably, the main shareholder of both InterRAO and Rosneft is the quasi-state holding Rosneftegas, chaired by Igor Sechin, a close associate of President Vladimir Putin.

In February, the bank's bonds sank as the conditions of the restructuring of nine issues of bonds of around RUB29.6bn (€489mn) were published, proposing a prolongation of the maturities to 2034-2036. Peresvet previously defaulted on eight bond issues.

The Moscow Patriarchy controlled 36.5% of the bank, another 13.2% is held by the Church-controlled fund Sodeystvie, 24.4% by the Russian Chamber of Trade and Commerce, with smaller stakes controlled by private individuals, including 12.4% by the bank's head Alexander Shvetsov.

Fitch Ratings downgraded the bank's long-term Issuer Default Rating (IDR) from 'B+' to default-level 'D', the agency said on October 24, while Standard & Poor's also downgraded the bank's long-term credit rating from 'CCC-' to 'D'.