MOSCOW, May 28 (Reuters) - Russia's second-largest bank VTB is looking to sell Rusenergo Fund, a company it started managing recently and which invests in Russian power-generation companies, by the end of the year, a source with knowledge of the bank's plans said.
Sources told Reuters VTB took over management of Rusenergo Fund, to which it was a major creditor, several months ago. The fund's assets dropped sharply in value and it was unable to service its debts.
The fund was valued at $2.4 billion in 2008 when it was formed, but is probably only worth a fraction of that amount now.
"VTB is looking to sell it, it's not a core asset," the source added, requesting anonymity as the information is not public. "It will probably be sold in several chunks."
VTB, like other large Russian state banks, is under Western sanctions over the Ukraine crisis and has seen its profits fall because of a sharp economic slowdown at home.
The downturn has also made it harder for local banks to sell non-core assets to bolster their balance sheets and forced them to create large loan-loss provisions for their corporate clients, many of which have been badly hit.
The source said VTB's objective was to sell Rusenergo Fund by the end of the year at a price not less than its current value on the bank's balance sheet, though it was not clear what this value is because the bank has not disclosed this information.
The source declined to say how much VTB could raise from selling the fund, or which assets could be sold first. A financial source in April valued it at 40 billion roubles ($760 million).
Rusenergo Fund does not reveal the exact identity of the assets it owns or their value.
Xenon Capital Partners, which managed the fund between 2010 and 2014, said the fund owned stakes in power-generation firms including RusHydro, Rosseti, Inter RAO , E.On Russia and Enel Russia.
VTB's press service declined comment. ($1 = 52.4100 roubles) (Reporting by Alexander Winning and Anastasia Lyrchikova; Editing by Christian Lowe and David Holmes)