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Russian regulator reveals problems of Otkritie Bank

August 29, 21:30 UTC+3

The regulator views financial recovery of the bank as a positive event for the market

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© Andrey Makhonin/TASS

MOSCOW, August 29. /TASS/. The Bank of Russia announced measures to improve financial stability of Otkritie Bank on Tuesday. The Central Bank was aware of problems in the bank long beforehand, First Deputy Chairperson Dmitry Tulin said on Tuesday.

"Owners and management of the bank approached the regulator with a request to perform financial recovery of the bank through the banking sector consolidation fund," Tulin said. Clients of the bank will not experience adverse changes, he said.

The Bank of Russia views financial recovery of Otkritie Bank as a positive event for the market, the official said. "We consider this event [improvement of financial stability of Bank Otkritie - TASS] as a highly positive in general terms. This is the first case of applying a new mechanism of financial recovery of credit institutions that came into force in June. The event is positive not merely for depositors, lenders and the bank proper but also for the banking sector and the financial market," Tulin said.

Financial recovery of Otkritie Bank with use of resources of the banking sector consolidation fund will last from 6 to 8 months, the Central Bank said.

"The financial recovery process with use of money of the banking sector consolidation fund may be broken down into two stages, with implementation of the same to take from 6 to 8 months. The bank will work later on with adherence to all mandatory standards," the Bank of Russia said.

The regulator will participate in the bank’s capital as a majority investor and will provide financial support to it at the expense of the banking sector consolidation fund created this summer. Temporary administration will start working in Otkritie from August 30.

Otkritie is a systematically import bank and is ranked 8th in the national banking system in terms of assets.

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