October 31, 2019 / 3:13 PM / 11 days ago

Russian tycoon Gutseriyev offers to pay in part for bailout costs: document

MOSCOW (Reuters) - Russian oil tycoon Mikhail Gutseriyev has offered to buy back a property company and other assets inherited by the state to partially cover the bailout of banks once owned by his family, a document reviewed by Reuters showed.

FILE PHOTO: Mikhail Gutseriyev, president of oil and gas company RussNeft, attends The Russia Forum 2012 in Moscow, Russia, February 2, 2012. REUTERS/Anton Golubev

The offer and an assessment by central bank officials that it may be the best outcome they can get is outlined in the 60-page-plus document examined by Reuters.

The offer, worth 136 billion roubles ($2.12 billion), falls far short of the expense of the bailouts. The offer consists of cash and non-cash parts.

The central bank believes it is entitled to claim more than 750 billion roubles ($11.7 billion) if it were to pursue the matter in court, according to the assessment of the offer recently prepared by the state officials.

Despite its modest size, officials recommend that it should nonetheless be accepted. The document was prepared by Trust bank, which was turned by the central bank into a ‘bad assets’ bank to hold toxic assets after 2017 bailouts.

The Gutseriyev family transferred some of its assets - including the ones now planned to be bought back - to the central bank in 2017 when they were first settling bailout costs.

In the document, officials weigh the alternative of taking Gutseriyev to court, concluding that accepting the money was the “recommended strategy” because it would be far faster.

Two people with direct knowledge of the matter confirmed the authenticity of the document, prepared in mid-September.

Clinching such a deal would secure some money for Russian state coffers and allow Gutseriyev and his brother, Sait-Salam, to avoid a lawsuit by the central bank, people familiar with the matter have told Reuters.

But the modest amount of money on offer, and frank official assessment that this is the best they can do, underscores the struggle to recover money spent on bailouts, a failure viewed critically by many ordinary Russians.

In the document, officials write that trying to claim roughly 750 billion roubles from the Gutseriyevs in courts to compensate for the bailout losses could last up to 5 years.

There was also a risk that, if legal actions are endorsed, other banks who hold certain assets of the family as collateral may call the collateral back, weakening Gutseriyev’s ability to pay the central bank. Such a scenario would risk Trust getting even less than the proposed 136 billion roubles, the document said.

Under the terms of the offer, the state would get 95 billion roubles ($1.5 billion) in cash after the Gutseriyev family buy back part of Russneft oil firm’s stake held by Trust, as well as stakes in Slavkaliy, a 49% stake in A101 developer and some other assets, the document showed.

Under that plan, Trust should gain another 41 billion roubles from the re-evaluation of a Russneft stake which the bank would still retain, the document showed.

Safmar, an umbrella for the Gutseriyev family assets, already holds 51% in A101, one of Russia’s top real estate developers, and a deal with the central bank, if agreed, would allow the group to regain full control over A101.

The deal, if signed, allows the Gutseriyev family to pay the central bank back in five years and after Sept 2024 the central bank would lose a right to claim more from them. Mikail Shishkhanov, a Gutseriyev’s nephew, is not part of the deal.

Russia’s banking bailouts culminated in the rescue of three banking groups in 2017 - Otkritie, B&N and Promsvyazbank.

They ran into trouble after years of aggressive expansion were brought to a sudden halt when western sanctions were imposed on Moscow over its role in the Ukraine conflict.

The central bank has taken legal action to recover losses relating to the bailouts of two other banks, Otkritie and Promsvyazbank, after it spent over 2 trillion roubles on bailouts of the three banking groups.

Trust, which owns the assets Gutseriyev has offered to buy back, declined to comment and Otkritie, which holds ‘good’ assets of the three rescued banking groups, did not reply to a request for a comment. Safmar and Russneft where Mikhail Gutseriyev holds senior management roles, declined comments.

Mikail Shishkhanov did not reply to voice message left by Reuters on his cell phone. Russia’s central bank did not reply to a Reuters request for a comment.

Writing by Katya Golubkova; editing by John O'Donnell and Alexandra Hudson

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