Russia’s Finance Ministry will invest 239 billion rubles ($6.6 billion) in preference shares of state-owned lenders VTB Group and Russian Agricultural Bank to bolster their capital, according to a government order.
Russia’s National Wellbeing Fund will convert a 200 billion-ruble subordinated loan repaid by VTB into preference shares, according to the decree published on the government’s website today. Russian Agricultural Bank and other lenders received similar loans after the 2008 global financial crisis.
The Ministry is investing in both lenders “to increase these institutions’ tier one capital,” the government said in the order.
President Vladimir Putin is allowing banks to convert subordinated loans into preference shares to increase their financial stability and meet growing demand for loans from companies unable to borrow on capital markets. VTB has struggled to raise
funding internationally after European Union and U.S. sanctions against state-owned Russian banks restricted its access to markets.
Officials for VTB in Moscow declined to comment by e-mail. Russian Agricultural Bank’s press service didn’t immediately respond to e-mail seeking comment.
The Russian government holds 60.9 percent of VTB, the bank’s website shows, and 100 percent of Russian Agricultural Bank.
VTB shares rose 1 percent to 3.97 kopeks by 1:50 p.m. in Moscow, boosting its market value to 514.5 billion rubles. The lender has lost 20 percent of its value this year.
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