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Financials

Russian central bank approves B&N Bank rescue plan

MOSCOW, Oct 14 (Reuters) - Russia’s central bank has approved a rescue plan for B&N Bank, including a capital increase and liquidity support, the regulator said on Saturday, without saying how much the financial assistance would cost.

B&N was the second private bank rescued by the central bank in less than a month, following Otkritie bank.

The capital top-up and extra liquidity for B&N Bank aim “to increase its financial stability and will assist the further development of the credit organisation”, the central bank said in a statement sent to Reuters.

Central Bank Deputy Chairman Vasily Pozdyshev has said that the financial rehabilitation of B&N Bank may cost 350 billion to 370 billion roubles ($6.1 billion to $6.5 billion).

“The final volume of the additional capitalisation needed by the bank will be established after the evaluation of its assets which will be conducted by the end of this year,” the central bank said. It said it “does not deem it expedient” to disclose now the volume of its financial assistance to the bank.

Finding a new investor “is not a relevant issue in the short term”, it added.

Once the plan is approved, B&N Bank may either write off its subordinated debt, or convert it into shares in the volume needed for its successful financial rehabilitation, the central bank said.

B&N Bank said last week it would write off subordinated debt worth $226.56 million owed to its shareholders.

The subordinated debt write-off is scheduled to be completed within three to four months from the introduction of temporary administration at B&N Bank, the central bank said. It imposed its administration at the troubled lender on Sept. 21, 2017.

B&N, which was Russia’s 12th biggest lender by assets before the central bank said it would bail it out, does not have publicly traded subordinated debt in issue.

The central bank’s Pozdyshev has said that B&N Bank’s additional capitalisation must be completed, new top management appointed and its development strategy approved by year-end.

The central bank has estimated that the financial rehabilitation of B&N Bank will take no more than two years. ($1 = 57.1705 roubles) (Reporting by Elena Fabrichnaya; Writing by Dmitry Solovyov; Editing by Adrian Croft)

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