AVN 64.85 Increased By ▲ 1.25 (1.97%)
BOP 8.70 Increased By ▲ 0.05 (0.58%)
CHCC 124.21 Decreased By ▼ -0.29 (-0.23%)
DCL 8.90 Increased By ▲ 0.05 (0.56%)
DGKC 100.89 Decreased By ▼ -0.81 (-0.8%)
EFERT 61.60 Decreased By ▼ -0.05 (-0.08%)
EPCL 43.00 Increased By ▲ 0.01 (0.02%)
FCCL 20.40 No Change ▼ 0.00 (0%)
FFL 13.82 Increased By ▲ 0.15 (1.1%)
HASCOL 13.57 Increased By ▲ 0.18 (1.34%)
HBL 128.82 Decreased By ▼ -0.06 (-0.05%)
HUBC 78.50 Decreased By ▼ -0.90 (-1.13%)
HUMNL 6.50 Decreased By ▼ -0.60 (-8.45%)
JSCL 22.30 Increased By ▲ 0.45 (2.06%)
KAPCO 27.63 Increased By ▲ 0.03 (0.11%)
KEL 3.61 Increased By ▲ 0.01 (0.28%)
LOTCHEM 12.47 Increased By ▲ 0.72 (6.13%)
MLCF 36.52 Increased By ▲ 0.01 (0.03%)
OGDC 97.54 Increased By ▲ 3.74 (3.99%)
PAEL 30.85 Increased By ▲ 0.50 (1.65%)
PIBTL 11.87 Increased By ▲ 0.09 (0.76%)
PIOC 83.50 Increased By ▲ 0.15 (0.18%)
POWER 9.17 Decreased By ▼ -0.03 (-0.33%)
PPL 87.93 Increased By ▲ 3.47 (4.11%)
PSO 190.28 Increased By ▲ 2.73 (1.46%)
SNGP 42.74 Decreased By ▼ -0.26 (-0.6%)
STPL 13.25 Decreased By ▼ -0.05 (-0.38%)
TRG 52.90 Increased By ▲ 1.57 (3.06%)
UNITY 23.62 Increased By ▲ 0.28 (1.2%)
WTL 1.00 Increased By ▲ 0.01 (1.01%)
BR100 4,194 Increased By ▲ 62.85 (1.52%)
BR30 21,088 Increased By ▲ 399.67 (1.93%)
KSE100 40,378 Increased By ▲ 514.17 (1.29%)
KSE30 17,016 Increased By ▲ 264.73 (1.58%)

MOSCOW: Russia's finance ministry, the central bank and the state development bank VEB will split among themselves a 212 billion rouble ($3.4 billion) debt from bank Sviaz, a step needed to support another troubled lender, a senior official said.

Sviaz Bank has merged with another lender, Globex, last year, after their owner, VEB, failed to sell them both. VEB took over the banks from private owners under a state-agreed bailout after the 2008 global financial crisis.

The state spent 212 billion roubles on Globex and Sviaz Bank in that bailout. Since then, Russia was hit by Western sanctions in 2014, triggering further problems for the banking sector.

Under the latest plan, the merged Sviaz Bank will be transferred to another state lender, Promsvyazbank (PSB), to boost the latter's balance sheet.

PSB was also a private bank until late 2017 when it was taken over by the central bank in a bailout amid the domestic banking crisis, and later turned into a defence sector-focused bank.

Alexei Moiseev, a deputy finance minister, told Reuters in an interview the key issue of why Sviaz Bank was still with VEB is the question of the 212 billion roubles VEB owes the central bank.

"The decision how to deal with the debt is not yet formally taken but already exists and will satisfy all parties - roughly speaking, losses (212 billion roubles) will be split between the government, VEB and the central bank," Moiseev said.

He added that the toxic loans from Sviaz Bank's balance sheet will remain with VEB. Russia has a step-by-step plan how to boost PSB's capital, which includes a cash injection and transfer of Sviaz Bank, Moiseev said.

Moiseev did not provide details of the scheme.

Two sources - one close to the central bank and another close to VEB - told Reuters the proposed scheme involved the finance ministry issuing OFZ treasury bonds worth 212 billion roubles, which will be bought by VEB.

After that, an exchange of the debt and some other instruments as well as some discounting involving all three parties is planned to be used, the sources said.

The central bank did not reply to a Reuters request for a comment, VEB declined to comment.

Copyright Reuters, 2019