Russia’s state development bank Vnesheconombank (VEB) is set to offload two subsidiary banks- Svyaz Bank and Globex Bank- in order to improve its capital position.
The subsidiaries will be sold to the state’s Deposit Insurance Agency (DIA) at a market rate set by an independent assessor, VEB said in a statement.
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The proceeds of the sale would be mainly used to repay the money borrowed from the central bank after it assumed control of Svyaz Bank and Globex Bank.
Rest of the debt would be converted into perpetual subordinated debt to the central bank that could serve as a form of capital.
VEB acquired the reigns of these two mid-sized lenders during the financial crunch of 2008-09 after they suffered financial problems. According to an Interfax ranking, Svyaz Bank manages assets of RUB365bn, while Globex Bank manages assets of RUB266bn.
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By GlobalData
