Fearing Contagion, Russia Bails Out Bondholders in its Biggest Bank Collapse Yet
Wolf Street - by Wolf Richter • Aug 30, 2017
Fearing Contagion, Russia Bails Out Bondholders in its Biggest Bank Collapse Yet
by Wolf Richter • Aug 30, 2017 • 32 Comments
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“The panicky mood has been dampened down,” as other banks are rumored to be teetering.
True to the playbook of bank bailouts, the Central Bank of Russia (CBR) decided to bail out Bank Otkritie Financial Corporation, the largest privately owned bank in the country, and the seventh largest bank behind six state-owned banks.
The Central Bank put in an undisclosed amount of money in return for at least a 75% stake. This is likely to be Russia’s biggest bank bailout ever, well ahead of the current record holder, the $6.7 billion bailout of the Bank of Moscow in 2011.
Otkritie and its businesses would operate as usual, the Central Bank said. The banks obligations to creditors and bondholders, which include other Russian banks, would be honored to avoid contagion.
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