April 19, 2017 / 12:46 PM / 3 months ago

Russia c.bank to lend $1.2 bln to save Orthodox Church bank

2 Min Read

MOSCOW, April 19 (Reuters) - Russia's central bank said on Tuesday it will lend 66.7 billion roubles ($1.19 billion) to help keep troubled bank Peresvet, a lender run by the Russian Orthodox Church, afloat.

Peresvet, one of Russia's top-50 lenders, will receive a further 69.7 billion roubles from more than 70 creditors who agreed to convert their loans into 15-year subordinated bonds, which rank after other debts if the bank faces bankruptcy.

This should be enough to cover a hole in Peresvet's balance sheet, which stands at 103.6 billion roubles, according to the central bank's estimates.

After inspecting Peresvet in 2016, the central bank introduced a "temporary administration" at the bank, half of which belongs to Russia's powerful Orthodox Church.

Earlier this year the central bank assigned managers from the Russian Regional Development Bank, owned by Russia's largest oil producer Rosneft, to temporarily run Peresvet.

Russian news agencies cited the central bank's press service as saying in October that Peresvet had taken excessively high risks when providing loans to construction companies facing a sharp fall in demand for their services.

The central bank did not withdraw Peresvet's banking licence but imposed a moratorium on servicing its obligations for several months in what, according to Fitch ratings agency, constituted a default.

The central bank is now in the midst of cleaning up Russia's banking system, which it says is plagued by "dubious activities" including non-performing loans and money laundering, and has shown no inclination to bail out Peresvet.

The church lender formally calls itself the "Commercial Bank for Charity and Spiritual Development of the Fatherland". ($1 = 56.2000 roubles) (Reporting by Kira Zavyalova; Writing by Andrey Ostroukh; Editing by Jack Stubbs)

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