The owner of Russia’s 12th biggest lender by assets, B&N Bank, has asked the central bank for a bailout, the regulator said on Wednesday, three weeks after another leading Russian bank had to be rescued.
The central bank, in an emailed statement, said B&N Bank’s owners, a holding group controlled by tycoon Mikhail Gutseriev and his family, had asked for financial rehabilitation via the central bank’s Fund for Banking Sector Consolidation.
That is the same mechanism that is being used to rescue Otkritie bank, Russia’s largest private lender, after it late last month said it had a hole in its balance sheet and needed help.
The central bank, in its statement, said that it would make a decision on the request from B&N Bank in the near future. Safmar, the holding group that controls B&N Bank, declined to comment.
A combination of factors has been putting pressure on some Russian banks. They were already under stress from an economic slowdown, made worse by Western sanctions, and have seen their share of bad debts rise over the past three years.
For some, their financial health worsened after the central bank, as part of a drive to clean up the banking sector, forced banks to make more rigorous provisions for non-performing loans. At the same time, banks’ margins have tightened because interest rates have come down.
Officials and banking sector analysts say they do not see a risk of a systemic banking crisis. They say that state-controlled banks, which account for more than half of assets in the sector, have strong capital positions and so are not in danger.
The central bank, meanwhile, has the resources to step in if other private banks fail, stopping a wider contagion, the analysts say.
B&N Bank, founded in 1993 is part of a sprawling conglomerate controlled by Gutseriev and his family that includes oil companies, a property development portfolio and an electronics retailer.
B&N Bank embarked on an expansion strategy after 2010, taking over smaller lenders including Moskomprivatbank, Rost Bank, SKA-Bank and others. In 2016 it completed its biggest expansion move, a merger with MDM Bank, one of Russia’s largest lenders. B&N Bank is not on the central bank’s list of systemically important lenders.
Fitch ratings agency wrote in an analysis published last month that the bank was one of a handful of Russian lenders, also including Otkritie, that had seen “an outflow of interbank funding” in the first few months of the year.
Fitch said that B&N Bank in June and July had resorted to using expensive central bank funding to cover the outflows.
“The usage of expensive government funding is indicative of liquidity constraints, in particular in the case of B&N Bank,” Fitch said in early August.