May 21, 2018 / 1:01 PM / a year ago

Russia to spend extra $290 mln on three Otkritie pension funds

MOSCOW, May 21 (Reuters) - The Russian central bank will inject an extra 18 billion roubles ($288.18 million) into Otkritie Group, which it rescued last year, to keep afloat three pension funds run by what was once Russia’s largest private lender, sources told Reuters.

Since last year, Russia has bailed out several major banks hit by an economic recession and a steep depreciation of the rouble after Western countries imposed sanctions over Moscow’s annexation of Crimea from Ukraine and other infractions.

The Bank of Russia rescued Otkritie, B&N Bank and Promsvyazbank in 2017. It said it planned to merge Otkritie and B&N to sell later, while turning PSB into a bank to serve the country’s defence sector.

The central bank has already channelled 42 billion roubles into three non-state pension funds — Lukoil-Garant, NPF Elektroenergetiki and NPF RGS — that are part of Otkritie Group. That money was earmarked for future pension payouts, according to the funds’ financial reports.

Otkritie’s new chief executive Mikhail Zadornov said in February that further funding had been promised to improve the pension funds’ capital.

The same three funds are now set to receive another 18 billion roubles from the central bank’s Banking Sector Consolidation Fund, Otkritie’s supervisory board said in a document seen by Reuters.

The three funds will receive aid from their shareholder, that is Otkritie, the bank’s press office said without revealing the size of the financial support.

A person close to Otkritie’s management said the money would come from the central bank to Otkritie, which would in turn channel the money to the pension funds.

The central bank, which oversees and regulates banks and pension funds, did not reply to a request for comment.

The new financial aid will be used to replace non-performing assets held by the pension funds, Otkritie’s press office said.

At end-2017, around 5 percent of assets held by Otkritie’s pension funds were non-performing, the press office for the three funds said.

Given that the three non-state pension funds had more than 600 billion roubles in assets as of January 2018, the size of non-performing assets could be close to 30 billion roubles.

Yuri Nogin, an analyst at Russia’s ACRA rating agency, said those non-performing assets could be securities issued by companies that have not defaulted yet but are expected to ask for their debt to be restructured.

According to his estimates, the 18 billion roubles could be enough to solve any issues regarding non-performing assets held by the pension funds.

$1 = 62.4613 roubles Writing by Andrey Ostroukh Editing by Catherine Evans

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