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. Last Updated: 07/27/2016

NRB Faces Losing 40% of Its Assets

The National Reserve Bank has handed over foreign assets worth $200 million to French bank Cr?dit Agricole Indosuez to settle a long-running lawsuit over forwards, Interfax reported Monday.

Neither the NRB nor Cr?dit Agricole confirmed that the sum had been transferred.

NRB’s net assets, as of Oct. 1, 2000, totaled around $500 million. This means that the bank faces losing 40 percent of its assets soon.

But NRB chairman Alexander Lebedev believes that it will inevitably take place and he is preparing to save his bank from financial disaster.

Cr?dit Agricole is the only Western bank that has demanded that its Russian contracting parties pay back their forward contracts that were concluded in August 1998 at the market rate of about 20 rubles to the dollar.

Foreign banks active in the market for GKO treasury bills concluded forward contracts with Russian banks in order to insure themselves from losses in the event of a change in the exchange rate resulting from a devaluation of the ruble.

But the insurance was not effective: The majority of the banks with which Cr?dit Agricole concluded forward contracts went bankrupt.

The NRB assets that are available to Cr?dit Agricole are mainly securities in the accounting system of Belgian financial services provider Euroclear.

The Russian bank has not been able to use those assets for more than a year after a New York court ruled in favor of Cr?dit Agricole in spring 1999 and ordered that the NRB pay the French bank $119 million.

Responding to the U.S. court order, a Belgian court froze the NRB accounts.

Lebedev said he had already initiated a court case in the Moscow arbitration court to recover $250 million from Cr?dit Agricole.

The case is based on calculations of the losses for the past year and a half from excessive blocking of accounts and the failure to deliver papers and fines, Lebedev said.

NRB is "losing weight" in Gazprom’s banking empire of which it is a part and the natural gas monopoly will be forced to rely even more heavily on Gazprombank, a banking analyst said in an interview.

Cr?dit Agricole’s lawyers said Lebedev is simply preparing for the worst.

"The Belgian court has not yet declared its verdict on the carrying out of the decision of the U.S. court on the recovery of the funds or the charge for the property of NRB for Indosuez International Finance BV," lawyer Kirill Kardashev said in an interview.