MOSCOW: Russia’s central bank says it is considering a rescue of B&N Bank, a large private lender, three weeks after another Russian bank had to be bailed out. The central bank said on Wednesday that Mikhail Gutseriev, the oligarch whose Safmar Group owns B&N, had asked for a rescue through a new fund. “We will take a decision on this issue in the near future,” the central bank said. B&N did not immediately respond to a request for comment. Mikhail Shishkhanov, Mr Gutseriev’s nephew who co-owns B&N, said the lender was in an “active stage of negotiations” with the central bank over “effective financial recovery”. Mr Shishkhanov blamed B&N’s struggles on MDM, which it acquired in 2015, and Rost Bank, a failed lender that it is absorbing with central bank funds. Those banks’ problems, Mr Shishkhanov said, “turned out to be much more serious than assumed in the conditions of a falling market and the current economic conditions”. The central bank also said that it had provided B&N with emergency liquidity at its owner’s request but did not disclose the terms. Before bailing out Otkritie last month, Russia’s largest private lender, the central bank provided it with Rbs728bn in August, some of which came through an emergency mechanism that bankers told the FT amounted to an unsecured loan. Two bankers said the central bank was likely to announce the rescue package for B&N, Russia’s 12th-largest bank by assets, on Thursday.
B&N is one of three top privately held lenders highly exposed to Otkritie through an informal group known as the Garden Ring. The central bank estimates Otkritie may have a balance sheet hole of up to Rbs400bn but senior Russian bankers say the final total may be twice that. B&N has been under pressure for months, say five Russian bankers, over a trajectory that mirrored Otkritie’s. Both companies were relatively unknown until a few years ago when they began aggressive acquisitions of failing lenders using cheap central bank financing. Mr Gutseriev, whose main business is Russneft, an oil company, is known for his survival instincts. After fleeing allegations of tax evasion to London in 2007, he returned to Russia three years later when the charges were dropped. In 2014, he made billions of roubles when Sberbank, Russia’s largest state bank, encouraged him to place a huge bet hedging the falling price of oil. The oligarch then set on an acquisition spree that included extensive real estate interests, adding to B&N’s portfolio, and buying M. Video, Russia’s largest electronics retailer. He told the Russian edition of Forbes that he saw B&N essentially as a vehicle for funding his empire. “Banks in Russia aren’t a business, they’re a financial instrument,” he said. “A bank is to a business what bullets are to a gun.” B&N built up a Rbs533bn retail deposit base, Russia’s sixth-largest, in recent years by offering customers high returns. But unlike Otkritie and the two other members of the Garden Ring — top-10 lenders Promsyvazbank and Credit Bank of Moscow — it is not on the central bank’s list of “systemically important banks,” essentially a too big to fail designation. “The more retail depositors there are, the less sense there is in bailing it out,” said a senior state banker.
