May 11, 2018 / 11:52 AM / in 5 months

Russia's Otkritie saddled with $6.8 bln of troubled assets

* C.bank bailed out Otkritie Bank on a bailout

* Injected 1 trln rbls on Otkritie’s rehabilitation alone

* Bank plans to separate problem loans into two types -document

By Tatiana Voronova

MOSCOW, May 11 (Reuters) - Russia’s Otkritie Bank, rescued by the state last year, had non-performing assets of more than 420 billion roubles ($6.81 billion) at the start of the year, breaking central bank requirements, according to a document reviewed by Reuters.

Russia’s central bank rescued three of the country’s biggest private banks, including Otkritie, in the second half of 2017 and shut hundreds of smaller lenders as part of a wider clean-up over the past few years.

The central bank said in March it was considering merging Otkritie and B&N Bank, and moving their toxic loans into a separate “bad bank,” yet to be established.

Otkritie has split its problem assets into two types: ‘Legacy’, or non-performing loans hard to sell, which total 310.8 billion roubles and ‘Strategy’ assets, which could be sold easier, and which are worth 112 billion roubles, according to Otkritie’s business plan, reviewed by Reuters.

A state banker, who declined to be named, confirmed the plan.

Otkritie declined to comment, while Otkritie Holding, the former parent company, did not reply to a request for comment.

‘Strategy’ assets include shares in VTB, Russia’s second-biggest bank, and payment processor Qiwi, as well as other assets, such as loans to the United Wagon Company (UWC), where one of the Otkritie group’s companies is listed as a shareholder with a stake of around 8 percent.

The Russian central bank has gradually tightened rules, including those governing lending to related parties or the banks’ owners, seen as among the causes of bank failures.

Banks under the central bank’s bailout are not obliged to meet the sector’s capital requirements, including limiting the amount of risk a single borrower or a group of connected borrowers has to 25 percent of the bank’s capital. That requirement stood at 67.4 percent for Otkritie Holding alone at the start of the year.

Otkritie’s management, led by former VTB executive Mikhail Zadornov, plans to cut non-performing loans to 256.3 billion roubles and the ones it could sell to 99.3 billion roubles in 2018, the document showed. It did not explain how the bank was going to do this.

$1 = 61.7105 roubles Reporting by Tatiana Voronova Writing by Katya Golubkova Editing by Louise Heavens

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