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. Last Updated: 07/27/2016

VEB Will Merge Svyaz Bank and Globex

Vneshekonombank plans to merge problem banks Svyaz Bank and Globex -- whose bailout cost the state some $5 billion -- and then sell the new company to a strategic investor, a senior VEB official said Tuesday.

Midsized Globex and Svyaz banks, ranked among Russia's top 50 banks, were effectively nationalized in the autumn when state bank VEB bought them for 5,000 rubles each. "They will probably be merged. We want to create a large commercial bank. In the future, we plan its sale to a strategic investor," VEB deputy chairman Sergei Vasilyev said at a KPMG conference.

"They complete each other: Svyaz Bank has retail, Globex has corporate business. They will become larger, it will be better."

Svyaz Bank's bailout cost the state at least 80 billion rubles ($2.57 billion). Saving Globex cost 87 billion rubles.

"The fact that money has been spent does not mean that the money has been burnt," Vasilyev said.

VEB's reorganization plan -- which should include the fate of the two rescued banks -- should be ready by July 1, and the final decision is yet to be made, Vasilyev said. He said VEB would likely keep a stake in the new bank "for some time," as "that would be much more comfortable for investors."