Russian Vneshprombank in Temporary Administration on Capital

  • Capital has dropped more than 30% from peak over 12 months
  • Russian regulator has revoked more than 100 licenses in 2016

Vneshprombank Ltd. was placed under temporary administration by the Bank of Russia after its capital dropped below the minimum required by regulators.

The regulator will audit the bank’s assets and retain control over it for six months, it said in a statement on Friday. The Russian lender’s capital has slumped by more than 30 percent from its peak over the last 12 months, according to the central bank.

Russia’s central bank has intensified its sweep of the financial industry as the country’s recession erodes lenders’ assets, revoking more than 100 licenses this year in a record cull. The regulator has also provided bailout funds to take over some troubled banks, including National Bank Trust, and the state has handed out more than 728 billion rubles ($10 billion) to help recapitalize more stable lenders.

Moody’s Investors Service downgraded Vneshprombank’s long-term debt to B3, six steps below investment grade, on Dec. 11, citing the rapid growth of its loan portfolio since the start of 2014 and a high concentration of its funding sources.

O1 Group, the investment company of Russian billionaire Boris Mints, placed a 3 billion-ruble subordinated deposit in Vneshprombank on Dec. 1, according to a statement on the bank’s website. A spokesman for O1 declined to comment on the central bank’s move.

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