Global economies are once again looking with a worried eye to the Russian economy.
Russian banks are in a bad state. They were already suffering because of the economic sanctions imposed by the EU and the US, the economic slowdown in Russia due to the collapsing oil price and the slide in the value of the ruble, but now things are going from bad to worse quickly.
Today, news is coming in that B&N Bank (with assets accounting for 2 percent of the Russian banking system) is looking for a bailout, which essentially means that the taxpayer can put up some money for their losses made over the next 20 years. Given the chummy relationship between the Kremlin and Russian bankers the bailout will probably be granted.
The chairman of B&N Bank, Mikail Shishkhanov, commented in the Russian press: “Our objective is, with the support of the central bank … to conduct an effective financial rehabilitation of the bank.”
But the reason that global economies are looking at Russia for this are not limited to B&N bank alone. Why? Well because two weeks ago, another Russian bank of their top twenty list needed a bailout. Otkritie Bank.
You probably never heard of B&N bank (Russia’s 12th largest bank) or Otkritie Bank (until a fortnight ago Russia’s 18th largest bank).
Neither did I until this afternoon. But then again, I know European and American banks but the domestic Russian banks are a mystery to me. And for most of you too.
Besides, the Russians seem to be working fast on this one.
The head office of B&N Bank is located 2 miles away from the Kremlin. Today a large truck from the company Shredder Express stood outside. Looks like a bit of spring cleaning was necessary then.
Of course the official word from the Russian regulator is that all is still fine, but when did we ever fully trust any official Russian instances.
I do remember this though, whenever a European or US top twenty bank needs a bailout and two weeks later another one, then my friends, it is possible that the bubble is about to burst.
Remember the list of banks in 2007-2008. First it was Northern Rock in the UK, then Bear Stearns US, then Landesbanken in Germany. Until it all came crashing down with Lehman Brothers International.