Central Bank of Russia takes over Otkritie Bank

The CBR announced on Tuesday (Aug. 29) that it had taken over administration of Otkritie Bank, Russia's eighth largest bank and second-largest privately held bank after Alfa Bank. The banking group's total assets at the end of 2016 amounted to 2.703 trillion rubles (about 43 billion euros).

Otkritie becomes the first Russian bank to enter receivership under new bank restructuring laws. The funding committed to the operation from a dedicated CBR Fund makes the Fund at least a 75 % stakeholder in Otkritie. The CBR says that Otkritie Bank will continue to meet all its obligations and that none of the bank's debt instruments will be converted to shares. Otkritie Bank suffered a large run on deposits all summer. In July alone, depositors withdrew over 6 billion euros worth of deposits.

Otkritie Bank in recent years pursued a very aggressive expansion strategy, acquiring the Rosgosstrakh insurance company and taking charge of restructuring National Bank Trust. Otkritie's balance sheet almost tripled in just a couple of years. The shift to public ownership of Otkritie Bank further increases the state's role in Russia's banking sector.

Market reactions so far have been subdued. The CBR has provided banks with additional liquidity to prevent problems in the interbank markets.