07 June 2004 03:41
Another Bank Goes Out of Business
CreditTrust on Friday became the second politically connected bank to go under in less than a month.
The bank, the nation's 70th-largest by assets with 8.9 billion rubles ($305 million) according to Interfax, put
itself into voluntary liquidation after a run by depositors sparked by last month's collapse of Sodbiznesbank.
The ownership structures of both banks are murky, but are widely believed to have the same beneficial owner,
Alexander Slesarev.
"CreditTrust's reputation has been hugely tarnished by association with Sodbiznesbank," said Andrew
Keeley, banking analyst at Renaissance Capital. "There are knock-on issues of trust involved. If people are aware
of connections between banks, the panic can spread quite quickly."
Sodbiznes, a top-50 bank by capital and 88th by assets, according to Profil magazine, was one of the largest known
contributors to President Vladimir Putin's re-election campaign. The Central Bank revoked its license last month
for what it said was money laundering activities.
CreditTrust's oversight committee was headed by Russian Olympic Committee president Leonid Tyagachev, and its
board of directors included former Moscow Deputy Mayor Boris Nikolsky. Tyagachev resigned Thursday, the same day the
board moved to liquidate the bank and stop liability payments.
An Olympic committee spokeswoman said that despite Tyagachev's post, he was not involved in any of the
bank's activities.
"CreditTrust, which positioned itself as a supporter and one of the chief sponsors of the olympic committee, did
not allocate any sponsorship [money]," Interfax quoted the spokeswoman, Darya Chervonenko, as saying.
Kommersant reported Friday that CreditTrust depositors had withdrawn some $7 million from the bank since Sodbiznes
went under, or about a quarter of all individual deposits.
The bank issued 500 million rubles in two-year bonds on June 5, 2003, but bought about half of those bonds back six
months ago. On Wednesday, the bank paid bondholders a 37 million ruble coupon, but it could not meet a promise to buy
back another 60 million rubles' worth of bonds early.
Fitch on Friday downgraded the bank's credit rating to CC, which indicates "default of some kind appears
probable," from CCC+, the credit rating company said in a statement. "CreditTrust's liquidity has been
negatively affected in recent weeks by market perceptions of its association with Sodbiznesbank, whose license was
revoked by the Central Bank of Russia last month," Fitch said.
"From our understanding, this bank has not been directly connected to Sodbiznesbank for some time," said
James Longsdon, director at Fitch Ratings.
"But it is almost irrelevant whether or not they are connected, because the market and the treasury desks have
made this link," he said by telephone from London. "The rumor does not need to be true."
CreditTrust officials could not be reached for comment, but the bank's web site says it is owned by six
corporations, none of which has a stake greater than 20 percent.
Deputy Central Bank Chairman Andrei Kozlov, who oversees the banking sector, told reporters on the sidelines of a
banking conference in St. Petersburg that officials had been inspecting the bank for a month but had not found any major
problems.
Keeley said two failures in just three weeks highlighted the need for a "strictly policed" deposit
insurance scheme. "It is unlikely that either bank would have been accepted into the scheme," and therefore
neither would have been allowed to take deposits, he said.
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[The Moscow Times] |
RUSSIA IN FACTS
