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Russian Finance Ministry to buy VTB, Rosselkhozbank shares worth $6.6 billion

August 25, 2014, 15:17 UTC+3 MOSCOW
Both banks — VTB and Rosselkhozbank — in June came under the EU and US sanctions, banning their medium-and long-term financing in EU countries and in the United States
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© ITAR-TASS/Alexei Filippov

MOSCOW, August 25. /ITAR-TASS/. Russia’s Finance Ministry in 2014 will buy with money of the National Welfare Fund (NWF) preferential shares of VTB and Rosselkhozbank worth 239.04 billion rubles ($6.63 billion), the ministry said on Monday.

Both banks — VTB and Rosselkhozbank — in June came under the EU and US sanctions, banning their medium-and long-term financing in EU countries and in the United States. The debt conversion will allow the banks to increase their Tier I capital, which will improve their financial stability.

According to the Russian Finance Ministry, the NWF volume as of August 1, 2014 stood at 3,088.79 billion rubles ($85.353 billion).

Russian President Vladimir Putin at the St. Petersburg International Economic Forum in May promised support to the national banking sector. He said then that “capitalization of the systemically important Russian banking and financial institutions, including by conversion of subordinated loans into preferential shares, which will expand the banks’ business loan capacity and cut the loans’ cost, will be increased.”

Russia’s major banks (Sberbank, VTB, Rosselkhozbank, Gazprombank and others — a total of 17 banks) received state loans during the 2008-2009 crisis.

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