IFC to buy Russia bank stakes, distressed assets

MOSCOW, June 11 (Reuters) - The World Bank's investment arm plans to channel $200 million to buy stakes in Russian banks struggling with bad loans and hopes to be a co-investor with the state, an official of International Finance Corp (IFC) [IFC.UL] said on Thursday.

IFC also plans to invest up to $100 million into distressed assets in Russia next year.

"This year will be most difficult for Russia ... By the end of the year we will see NPL (non-performing loan) rates that are much higher than they are today," Timothy Krause, a senior manager in IFC's financial markets division, said at an IFC seminar.

IFC plans to use the fund to recapitalise regional banks by acquiring common stock and injecting cash into Tier II capital.

"We are hoping the other investors including the Russian government would invest ... I would like to have a fund at least of $1 billion," Krause said, adding that talks with government officials are taking place.

Russia's top officials, including president Dmitry Medvedev, have said the problem of banks' bad loans should be solved through recapitalisation, ruling out the creation of a so-called "bad bank" to mop up soured assets. [ID:nL534983]

Anatoly Aksakov, president of Russia's regional banking association, said at the IFC seminar the open auction of distressed assets may he a solution to the problem of pricing them for sale, thereby avoiding corruption.

"If we help the first auction it is going to be a good example to the market. I hope in a year we will have some results to show you," Krause said. (Reporting by Dmitry Sergeyev; Editing by David Holmes)