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. Last Updated: 07/27/2016

Self-Defense Sparks Bank Rescue

The Moscow regional administration never had any intention of entering the banking business. But when Unikombank, the lender that had all its tax revenue and paid out most of its salaries, was pushed to the brink of failure last month, the regional government had no choice but to step in, a top official said Wednesday.

"It was necessary for us to make sure the bank would not run into serious difficulties," Viktor Vlasov, first deputy head of the Moscow regional administration, said in an interview, adding that more than 4,000 social organizations in the region as well as the government had accounts in the bank.

The regional government's acquisition of a controlling stake in the bank makes Unikombank the first commercial bank in Russia to act as a state regional bank, he said.

The bank should be completely "back to normal" in a little more than month, Vlasov predicted, saying the regional government's role would help Unikombank "become one of Russia's strongest banks."

Unikombank, Russia's 12th largest by assets, was taken into Central Bank management May 21 in the face of rising liquidity problems. The Central Bank team is due to be in place up to August 20, but Vlasov said a new board of directors could take over completely following a shareholders meeting scheduled for mid-July.

The Moscow region paid 50 billion rubles to acquire 35 to 40 percent of Unikombank, which amounts to a controlling interest, Vlasov said. The funds came from debts the federal government will repay to the region, he said.

"It will continue to act as a normal commercial bank" under the region's management, he said, adding that the region will seek to modernize and improve the bank's operations.

Unikombank had spent "unreasonable" amounts on building lavish offices, leading to its liquidity problems, Vlasov said.

"Our mission is to help the bank restore its finances and then to make sure that its resources will be used for the economic development of the region," he said, noting that Unikombank's 50 branches also served many state and private companies in the region.

Some of Unikombank's 250,000 depositors have found their accounts frozen as the Central Bank reviews payouts on a priority basis. A Unikombank cashier said Wednesday she did not know exactly when payments would be made, but a bank official earlier this week said emergency credits from Sberbank and other institutions would enable most clients to be paid within two weeks.