Three sources familiar with new calculations being prepared for Russia’s central bank have told Reuters that the country will dramatically cut its estimate of the sum it expects to recover from a “bad bank” set up after the collapse of three major lenders.
Since 2017, the Bank of Russia has spent over $40 billion bailing out troubled large banks Otkritie, B&N and Promsvyazbank. It had hoped to recover between 40 and 60 percent of the value of their 2 trillion rubles ($30.45 billion) assets that were transferred to Trust Bank, the bad bank, in the rescue deal.
As part of the rescue of Russia’s three largest private lenders, the central bank split the assets into “good” and “bad.”
Most of the troubled assets from the three banks were transferred last year to Trust Bank, which was formerly part of the Otkritie banking group.
But the central bank now expects to receive only 20 percent of the value, according to the calculations being put together by the managers of Trust Bank, the sources said. The estimate is being downgraded because the assets were overpriced in the initial calculations, they said.
A Trust Bank spokeswoman told Reuters that the recovery rate was still being discussed. The central bank did not reply to a request for comment. It is not clear when the revision will be announced by the central bank.
“The real recovery rate will hardly exceed 20 percent. It will likely be lower,” said one of the sources, who is familiar with the central bank’s new calculations. “These assets were initially overpriced.”