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. Last Updated: 07/27/2016

Vneshtorg Giving Up On MOST Bank Chain

Unable to cut a deal with creditors of Vladimir Gusinsky-founded MOST-Bank, state-owned Vneshtorgbank has given up for good the idea of taking over MOST's retail network.

"It is impossible to use MOST-Bank's retail network to develop Vneshtorgbank's business, because MOST-Bank's relationship with creditors turned out to be difficult and negotiations brought little progress," Central Bank Chairman Viktor Gerashchenko said Tuesday. "It looks like MOST-Bank will be stripped of its license shortly."

MOST-Bank's fate was doomed after Vneshtorgbank failed to cut a deal with its main creditor, the government.

The "decision on the bankruptcy of MOST-Bank is not a tragedy for Vneshtorgbank," board chairman Yury Ponomaryov was quoted by Interfax as saying Tuesday.

"Nobody was willing to stick his neck out," said Boris Sergeyev, a spokesman for Vneshtorgbank, referring to similar efforts by other officials in the past that have led to criminal charges.

The irony of the situation is that Vneshtorgbank is 99.99 percent owned by the Central Bank, so apparently one branch of the government was not interested in helping out another branch, the Finance Ministry.

The Finance Ministry refused to sign off on Vneshtorgbank's request to restructure the $100 million debt owed to it by MOST-Bank.

Yury Korostelyov, head of the Moscow city government's financial department, has already had criminal charges brought against him for signing off on a debt-restructuring deal with MOST-Bank.

And earlier this month the Central Bank official who signed off on a 1998 stabilization loan to now-defunct SBS-Agro bank was charged with abuse of power.

If convicted, Alexander Alexeyev, deputy head of the Central Bank's Moscow department, faces up to 10 years in prison.

Revoking MOST-Bank's license would put the final nail in the coffin of Gusinsky's flagship enterprise.

MOST-Bank — once the core of Gusinsky's Media-MOST group, which includes the television station NTV (taken over by Gazprom), the newspaper Segodnya (closed by Gazprom) and radio station Ekho Moskvy (under threat by Gazprom) — is holding debts of more than $650 million against liquid assets of just $100 million.

State-owned Vneshtorgbank paid a mere 5.5 million rubles ($198,000) for MOST-Bank last October in the hopes of using its retail network.

MOST-Bank ran into trouble after the 1998 financial crisis, which wiped out almost all of the so-called "oligarchs' banks."

It managed to tread water for a while with the help of the Moscow city government, which used to park interest-free budget funds on the bank's accounts, and a stabilization loan from the Central Bank. But last year, when City Hall decided instead to use the Bank of Moscow, MOST went under.

Last May, the Central Bank — which had taken 76 percent of the bank's shares as collateral for the stabilization loan — installed external management at MOST. Central Bank chief Viktor Gerashchenko, who signed off on MOST's stabilization loan in October 1998, also heads Vneshtorgbank's supervisory board.