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. Last Updated: 07/27/2016

CB to Extend Crisis Credits' Due Dates

The Central Bank expects difficulties extracting repayments from six commercial banks that received 14.4 billion rubles (now about $517 million) worth of stabilization loans in the wake of the 1998 crisis, Central Bank First Deputy Chairwoman Tatyana Paramonova said this week.

Paramonova pointed to the Central Bank's wide-scale revocations of banking licenses as "indirect confirmation" that the Central Bank intends to extend the due dates of these stabilization credits.

After the 1998 meltdown, the Central Bank was very selective in which banks it chose to help survive. Of the 200 candidate banks, only six received bailout loans.

Analysts polled said Paramonova's announcement suggests the Central Bank is not prepared to bankrupt the survivors and extensions of the crisis credits will probably be granted.

The banks that received the credits, however, have not fared well — only the Moscow Industrial Bank has so far been able to return its debt of 400 million rubles. The Central Bank believes Avtobank, the Bank of Moscow and Vozrozhdeniye will also return their loans in full, but only if the terms of the credits are extended.

"The stabilization credits allowed the selected banks 'to not notice' their losses on the GKO [treasurybill] market and retain their client base," said Sergei Rutkovsky, a bank analyst with the agency Rating. "However, the process of repaying these credits should be drawn out perhaps by 10 years or so," he said.

The biggest benefactor of the emergency loans was SBS-Agro, which received a stabilizing credit of 1 billion rubles and an additional 5.9 billion rubles in loans guaranteed by regional administrations to which SBS had provided agricultural credits.

Now SBS-Agro is under external management by the state Agency for Restructuring Credit Organizations, or ARKO, and is teetering on the brink of bankruptcy. If SBS-Agro and its creditors can make an amicable agreement, the bank would be able to extend the terms of its crisis loans another 10 years.

If SBS-Agro goes under, the Central Bank, along with the other creditors, would receive at best 2 percent of their claims. Previous Central Bank attempts to retrieve money from the guarantors of other SBS-Agro credits failed. As a result, the Central Bank has filed lawsuits with the Moscow arbitration court against 40 regions seeking the return of 2 billion rubles.

The Central Bank provided 1 billion rubles to the Bank of Moscow for restructuring Mosbiznesbank, which is being liquidated. The Bank of Moscow has yet to pay back the loan and refuses to comment on the matter, citing the privilege of commercial secrecy.

MOST-Bank was another of the chosen few, receiving 2.3 billion rubles after the crash. But after Central Bank subsidiary Vneshtorgbank bought MOST for $198,000 the question of repaying the loan became meaningless. The Central Bank transferred its right of claim to its subsidiary and in doing so freed itself of the burden.

Avtobank has also been unable to return its credit of 2.5 billion rubles, which at present would be too much of a burden for the bank: The bank's hard currency holdings as of Oct. 1 came to 17 billion rubles. The initial date for returning the loan passed this February after a one-year extension was granted. Avtobank has made no payments toward the credit since then, its press service said.

The date for repaying the credit of 1.2 billion rubles by the Vozrozhdeniye bank has yet to arrive.