The resolution of Binbank may require between RUB 100 and 150 billion

22 september 2017 | Rossiyskaya Gazeta

Binbank has asked the Bank of Russia to consider resolving it through the Banking Sector Consolidation Foundation. The decision to go ahead with the resolution means that the cost of saving the bank is estimated to be lower than the expenses of paying all the insurance compensations and the direct losses from the domino effect among the bank's creditors. "On the whole, the most optimistic estimates suggest that resolving Binbank will require between RUB 100 and RUB 150 billion," Analytical Center expert Daniil Nametkin commented on the situation in an interview for the Rossiyskaya Gazeta.

Daniil Nametkin
Daniil Nametkin
Department for Expert Analytics

In H1 Rost Bank, which was earlier acquired by Binbank and which is now undergoing resolution, reported it had negative capital of RUB 62.7 billion, while Binbank's credit portfolio totals RUB 130.3 billion, of which RUB 20.5 billion is overdue loans. "If we assume 100% reserves for overdue loans and partial additional reserves for the reappraisal of risks for the other loans, some RUB 30-40 billion more may be required," Mr. Nametkin says. In addition, the level of capital sufficiency needs to be raised to 8%, which will require additional funds, the expert believes. As of September1 Binbank had a capital of just RUB 94 billion, which will probably be significantly reduced after the reserves are increased and the bank issues new shares to the Bank of Russia to increase its capital sufficiency.

In the meantime Binbank assured its depositors they had nothing to worry about and recommended that they refrain from early withdrawals so as not to use accrued interest, the Rossiyskaya Gazeta notes. The working hours of all the branches of the bank have been extended by two hours through Friday, the bank has also hired additional staff or its contact centers and offices across Russia.

Source: The Rossiyskaya Gazeta

Picture from open sources