December 22, 2017 / 2:02 PM / a year ago

Russia central bank says finds law violations at bailed out Promsvyazbank

FILE PHOTO - People walk past a branch of Promsvyazbank in Moscow, Russia, August 19, 2015. REUTERS/Maxim Zmeyev

MOSCOW (Reuters) - The Russian central bank has found multiple law violations at Promsvyazbank (PSB) that it now plans to report to the law enforcement authorities, the central bank said on Friday.

The central bank decided last week to bailout PSB, Russia’s No.10 lender by assets, and started an investigation into the bank’s accounts. On Friday, the central bank approved a rescue plan aimed at preventing PSB’s bankruptcy.

A temporary administration at PSB appointed by the central bank found corporate credit dossiers worth 109.1 billion rubles ($1.87 billion) had been destroyed, alongside other violations, the central bank’s deputy governor, Vasily Pozdyshev, said.

The temporary administration also found the bank was funding its own subordinated debt via the REPO operations without disclosing the deals in the accounts, he said.

The subordinated debt volume is matching the volumes of credit dossiers destroyed, Pozdyshev said.

A representative for Promsvyazbank Chairman Dmitry Ananyev declined to comment.

The central bank said last week that the bank’s rescue could involve writing off 100 billion rubles ($1.71 billion) in subordinated debt to reduce the amount the regulator needed to spend on the bailout, its third major bailout this year.

The rescue plan approved on Friday triggers the write off of PSB’s subordinated debt, including deposits, loans and bond issues.

Reporting by Tatiana Voronova and Andrey Ostroukh; Editing by Katya Golubkova and Edmund Blair

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