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. Last Updated: 07/27/2016

ARKO Controls SBS-Agro

Ailing banking giant SBS-Agro is now fully controlled by the Russian agency for restructuring the banking sector, ARKO, government officials said Tuesday.

ARKO has taken over more than 99 percent of the bank's shares following the agency's announcement last week that it would close down the bank, the deputy chief of the agency, Valery Miroshnikov, said Tuesday.

A 30-day debt repayment moratorium for SBS-Agro that ARKO instituted while it probed the bank's finances is no longer valid, Miroshnikov said in remarks reported by Prime-Tass.

The bank's liabilities were $2.3 billion greater than its assets, according to the results of the probe.

ARKO last week unveiled a restructuring scheme to boost the bank's liquidity through a system of offsets for arrears to the federal government, claiming that the plan could allow the agency to pay off up to 23 percent of creditors' total demands. Bankrupting SBS-Agro would only free up funds to pay off 10 percent of creditors, agency officials said.

The onus for the decision on how the bank is restructured lies with the creditors, and the agency will forward its restructuring proposals to the creditors within the next 30 days, Miroshnikov said.

If creditors fail to reach an amicable agreement on the restructuring plan, ARKO will launch bankruptcy proceedings against the bank through the courts.

ARKO said last week it is working to set up a new state agriculture bank, Rosselkhozbank, to handle SBS-Agro's extensive credit portfolio in the agricultural sector.

Another yet to be established bank, the Russian Development Bank, is to handle SBS-Agro's portfolio in the industrial sector under the ARKO plan.