MOSCOW: Russian state defence company Rostec will provide additional capital to its subsidiary bank Novikombank due to revaluation of loans to companies that fell under Western sanctions, according to a Rostec statement.
Rostec, also under Western sanctions imposed on Russia for its involvement in the Ukraine crisis, would not disclose how much money will be shifted to the bank, saying only that it will increase its share in the bank to "super-controlling."
Last week, Fitch rating agency downgraded the bank's rating to B- from B, citing asset quality problems and lack of adequate capital support from Rostec.
Most of the bank's woes come from loans issued to the debt-laden airline Transaero o , which filed for bankruptcy last year. Loans to the company helped push Novikombank's share of non-performing loans to 12 percent last year, from 3 percent at the end of 2014.
Fitch estimated that Novikombank needs around 6 billion roubles ($76.82 million) to create reserve buffers for loans to Transaero and investments in securities held in foreign depositaries.
Novikombank is a reference bank, among others, for defence enterprises headed by President Vladimir Putin's longtime friend Sergei Chemezov.
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