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Fitch called the reorganization of the Otkrytiye an important test in the process of clearing the banking system of the Russian Federation



The approach of the Russian authorities to support the bank the Otkrytiye speaks of its importance for the banking system and does not necessarily create a precedent for resolving the issue with creditors in the rescue of banks, the rating agency Fitch Ratings said on Friday.



02.Sep.17 3:18 PM
By Daria Zaytseva
Photo Toinnov.com

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Fitch called the reorganization of the Otkrytiye an important test in the process of clearing the banking system of the Russian Federation
According to the agency's press release, the impact of the reopening of the Otkrytiye on Russia's budget should be limited, but government intervention will be an important test of the authorities' ability to continue clearing the banking system and improve ways to resolve the situation with problem banks while retaining confidence in the financial sector.

The Central Bank of Russia on Tuesday announced the rehabilitation of the bank the Otkrytiye through the entry into its capital - the regulator will receive at least 75 percent of the shares - and said that the bank will continue working as usual.

The regulator introduced an interim administration in the bank and will become the main investor of the Otkrytiye, using the funds of the Fund for the Consolidation of the Banking Sector, which was created by the Central Bank for the rehabilitation of banks. A moratorium on the satisfaction of creditors 'claims will not be established, nor will a mechanism for converting creditors' funds into shares (bail-in).

Fitch said that the reopening of the Otkrytiye is important because it had previously been the largest private Russian bank (it was one of three systemically important private banks), and also since the Otkrytiye will be the first bank where the Central Bank will test a new mechanism in which support comes through the Banking Sector Consolidation Fund.

Protection of senior creditors and depositors the Otkrytiye can help to maintain confidence, but the consequences of sanitation are not yet clear, the agency said in a press release.

According to Fitch estimates, Russia has allocated 3.2 trillion rubles (3.7 percent of GDP for 2016) to support the banking sector since 2014.




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