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. Last Updated: 07/27/2016

Banks Took Losses Up to $70M: Aven




Russia's biggest banks lost as much as $70 million during the recent turmoil on world markets, according to one of the country's top bankers, who said his own bank had lost $30 million.


Alfa-Bank president Pyotr Aven said at a news conference in St. Petersburg last Friday that each of Russia's big banks lost anywhere from $30 million to $70 million during the October crisis.


His own bank had not been immune from the bloodletting, he said. "According to experts' estimates, as well as our own, we have lost up to $30 million," Reuters quoted him as saying.


The bank's vice president, Alexander Gafin, confirmed the figure Monday but said the bank had absorbed the shock.


"Many banks have managed to wriggle out of the crisis already," he said. "We have big assets and [the loss of $30 million] didn't affect us."


According to the Rating Information Center, a Russian bank-watch agency, Alfa-Bank had assets of 11.366 trillion rubles ($1.92 billion) as of Nov. 1.


Many of Russia's banks bought corporate shares during the market boom earlier this year and were hurt during the crisis when share prices plunged.


They had also invested heavily in government bonds, or GKOs, and took a beating when the Central Bank stopped supporting the yields.


The worst affected would be the banks who used loans to invest in corporate papers, according to one analyst at the agency who did not want to be identified.


"Especially if they used stocks later as collateral," he said, adding this practice was common among Russian banks.


The analyst predicted that Russia would see some bankruptcies among big banks next year. "There are definitely some casualties in our ranks but it is unclear who they are," he said.


One of the reasons for that lack of clarity, according to analysts, is the behavior of the Central Bank. They say the bank has allowed other banks to transfer their losses on GKOs to next year's accounts.


"It is a fact that we will get no real numbers in their reports," said Andrei Yashchenko, head of research at Montes Auri.


"Reports prepared according to international standards [which must include all losses] will appear not earlier than in March or April."


The Central Bank on Monday would not comment on Yashchenko's suggestion. "We have no official information on this matter," said Yelena Korotkova, a spokeswoman at Central Bank.


According to analysts, banking losses on the stock market are also difficult to estimate because banks usually trade shares through affiliated structures.