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. Last Updated: 07/27/2016

Rossiisky Kredit Starts Payback Program

Rossiisky Kredit, formerly a top bank, abruptly started making payments on all household accounts Tuesday, finally giving the thousands of depositors who stood by the bank access to their savings.

Household accounts had been frozen since the government in August devalued the ruble and shut the domestic debt market, in which Rossiisky Kredit and many other banks had heavily invested.

The bank Tuesday began honoring all accounts with savings up to $1,000, reimbursing depositors in dollars or rubles, spokeswoman Galina Subbotina said.

Clients with accounts larger than $1,000 are getting partial reimbursements while the rest will be repaid in three years, the bank said.

The bank in April began paying out ruble household accounts of up to 10,000 rubles.

Rossiisky Kredit refused on Tuesday to disclose how much of the 1.14 billion rubles and $88 million in household accounts it intends to pay back to clients.

Not all depositors have stuck by the bank, though. Thousands of depositors transferred their accounts to state-owned Sberbank under a Central Bank-backed scheme last fall, and the bank itself moved part of its assets to Impexbank, saying the banks would merge if times got better.

If Rossiisky Kredit sticks by its plan to pay back hard-currency accounts in dollars, clients who did not give up on the bank will be getting much better terms than those who moved over to Sberbank. Those depositors were paid back by Sberbank earlier this year at a rate of 9.33 rubles to the dollar.

Bankers said Rossiisky Kredit started paying clients to stave off Central Bank threats to pull its license.

"[Bank officials] started making payments because Rossiisky Kredit could be one of the first banks to lose its license under pressure from the IMF and the World Bank," said a Moscow banker who spoke on condition of anonymity.

The International Monetary Fund and the World Bank have been pushing the government to revoke the licenses of banks deemed as bankrupt before releasing billions of dollars in much-needed loans.

The IMF insisted in talks earlier this year that at least six banks should be stripped of their licenses. The World Bank, in an audit of 18 banks, declared that 15 of them had insufficient funds to cover their liabilities.

Just last Friday, government leaders met with officials from the Central Bank and representatives of Moscow's largest banks to discuss which banks would lose their licenses.

So far only Bank Menatep has lost its license in the crackdown orchestrated by international creditors.

Meanwhile, leading bank MOST-Bank on Tuesday honored 16 billion rubles ($650,000) in bearer bonds placed in June last year, saying business had almost returned to pre-crisis levels.

The bank has been doing better than many rivals because it sold off much of its domestic debt portfolio before the crisis and had only a small amount in dollar-denominated liabilities, said Vasily Borisov, spokesman for MOST-Bank.

Also, the bank last August received some lucrative accounts from the Moscow city government, said a Moscow banker who asked not to be identified.

"This cushion gave them a reprieve and helped them make payments on deposits on time," he said. "By now MOST-Bank practically recovered to pre-crisis levels."