Russia Finds $2.4 Billion Hole at Lender as Assets Plundered

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  • Central bank revokes lender's licence without bailout
  • Regulator accuses lender's management of distorting accounts

Russia’s central bank pulled the license of Vneshprombank, the country’s 40th biggest bank by assets, after uncovering evidence of asset-stripping and finding a hole in its balance sheet.

Vneshprombank may have to write off assets valued at over 200 billion rubles ($2.4 billion), Deputy Bank of Russia Governor Mikhail Sukhov said Thursday by e-mail. The regulator accused management of plundering assets “over a long period of time” and falsifying accounts, and said rescuing the lender isn’t economically justifiable, according to a website statement.

“Vneshprombank’s asset losses compared to its liabilities was a record in absolute terms over the last two and a half years,” Sukhov said. “The prospect of recovery through the courts is low and will need to involve cooperation with law enforcement authorities.”

Russia’s central bank continues to weed out weak or fraudulent lenders after revoking about 100 banking licenses last year. UralSib Bank and National Bank Trust, which were also top 50 lenders by assets, were bailed out by lenders and received billions of rubles in state funds to restore the banks to financial health.

The bank’s former management may have been engaged in asset withdrawal, with the assets possibly invested in real estate, expensive vehicles and financial instruments in Russia, Europe and the U.S., the central bank said in a separate statement.

Vneshprombank, where Rosneft OJSC and Transneft OJSC have kept money,
ceased processing payments in mid-December, after the regulator placed it under temporary administration and announced a three-month moratorium on payments to creditors. Transneft spokesman Igor Dyomin said the oil pipeline operator had 9 billion rubles in the bank, while Rosneft’s press service said Tuesday that the crude producer has withdrawn all its funds.

Novorossiysk Commercial Sea Port PJSC said Thursday in a filing that it had 18.7 billion rubles with the lender. Its shares dropped 1.5 percent to close at 3.645 rubles in Moscow.