SocGen guarantees funds for Russian bank - exec
By Simon Shuster
MOSCOW, Oct 2 (Reuters) - France's Societe Generale (SOGN.PA) has guaranteed to support and refinance the mortgage loans of Rosbank (ROSB.MM), the Russian bank it bought this year, a Rosbank executive said on Thursday.
Russian companies have increasingly turned to their majority owners to foot the bill for projects and miscalculations in recent months, as confidence in the financial system has disintegrated and credit has dried up.
"It is beyond question that Societe Generale will definitely support all of our initiatives. This was confirmed at our last meeting in Paris," Igor Antonov, the first deputy chairman of Rosbank, Russia's eighth largest bank, told a press briefing.
"It was stated that if all of a sudden something inordinate happens, the group will support (Rosbank) no matter what."
Societe Generale could not immediately be reached for comment.
The French banking major paid $2.3 billion this year for control of Rosbank, which had a retail lending portfolio of 122.9 billion roubles ($4.80 billion) as of Sept. 1, 2008.
Over the next two to three years, Rosbank wants to increase the share of mortgage loans in this portfolio to 50 percent from 13 percent, Antonov said.
HOUSING BUBBLE
In this respect, Rosbank stands out from its local peers, many of whom have suspended or closed down their mortgage lending operations due to growing tightness in the credit market and concerns that Russia's housing bubble could burst.
Berry Schumaker, real estate analyst at Uralsib brokerage in Moscow, said: "It's sort of a dark (real estate) market and we don't really know where we stand right now. The bubble will probably go off, it's just taking a while."
In a research note on Wednesday, Unicredit Aton, another Moscow brokerage, compared the housing market in Russia with that of the United States, where soaring prices and reckless lending have led to a collapse that infected the wider economy.
"We cannot exclude the likelihood of the bubble on the real estate market in Russia popping just like it did in the U.S. and Japan," the note said, Vedomosti business daily reported.
Rosbank's Antonov said that if something does go wrong, Societe Generale could either buy the Russian firm's mortgage loans outright, or securitise them. He declined to say how much the French giant would be able to absorb.
"We presented the amounts that theoretically could interest us, and we were told that we would not be refused," he said, also declining to say what portion of Rosbank's loans are delinquent.
The recent trend of Russian companies tapping the cash piles of their owners has been especially pronounced in the electricity sector, where many firms cannot delay their construction plans due to the risk of a power shortage.
Six of these companies, failing to foresee the inaccessibility of loans and the rising cost of equipment, have had to announce share sales, and their majority owners, including gas giant Gazprom (GAZP.MM), have said they will be ready to pay for them out of pocket.
(Editing by Sharon Lindores)
