March 6, 2018 / 2:16 PM / 7 months ago

Russia central bank to spend $1 billion on boosting B&N Bank's capital

MOSCOW (Reuters) - The Russian central bank will spend 56.9 billion rubles ($1 billion) on boosting financial strength of B&N Bank, a troubled lender it had to rescue last year, the central bank said on Tuesday.

A man walks out of the headquarters of B&N Bank in Moscow, Russia September 20, 2017. REUTERS/Grigory Dukor

Banks’ financial health is on the radar as the central bank proceeds with its clean-up program. The central bank took over three major private lenders, Otkritie, B&N Bank and Promsvyazbank (PSB), in the space of a few months in 2017.

The central bank said on Tuesday it had decided to channel 56.9 billion rubles to buy an additional issue of B&N shares in order to beef up the lender’s capital.

Earlier the central bank said it planned to spend around one trillion rubles ($18 billion) to bail out Otkritie, once Russia’s largest private bank, and its smaller rivals B&N and PSB.

Once the central bank buys the extra issue of B&N shares and settles B&N claims to its subsidiary bank Rost, capital levels of the rescued lender will meet requirements, the central bank said.

It also said it planned to merge B&N with Otkritie by April 1, 2019, putting a timeframe on its earlier plan.

After the merger, the central bank has previously said B&N and Otkritie will be sold to the market, while PSB is now being converted to a defense sector bank.

Bailouts of major banks sent ripples across the shrinking banking system which have only recently gradually faded. After months marked by exacerbated outflows of corporate money and rising borrowing from the central bank, Russia’s major banks saw moderate inflows and outflows in January.

Reporting by Andrey Ostroukh and Maxim Rodionov; Writing by by Andrey Ostroukh; Editing by David Evans

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