December 22, 2017 / 11:26 AM / 9 months ago

Promsvyazbank's subordinated debt to be written off: central bank

MOSCOW (Reuters) - The Russian central bank said on Friday that the subordinated debt of Promsvyazbank (PSB), which was rescued this month, will be written off.

In its third rescue of a large private bank this year, the central bank said this month that it would bail out PSB, the country’s 10th largest lender by assets.

The central bank had said earlier the rescue could involve the writing off 100 billion roubles ($1.71 billion) in subordinated debt to reduce the amount the regulator needs to spend on the bailout.

On Friday, it said it had approved the rescue plan aimed at preventing PSB’s bankruptcy, which triggers the write off.

The plan will include terminating bank’s obligations on subordinated debt including deposits, loans and bond issues, the central bank said on its website.

Subordinated debt is unsecured and ranks last in the queue to be repaid in the event of a liquidation.

PSB, on its website, said this month investors held $1.13 billion of subordinated debt from four bond issues sold between 2012 and 2014.

The two previous bank bailouts this year, of private banks Otkritie and B&N Bank, also involved writing off some of their subordinated debt.

The central bank also said the rescue of PSB would terminate money liabilities it had with its management and those who controlled the bank.

Reporting by Andrey Ostroukh; editing by Katya Golubkova and Jason Neely

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