Leading Russian bank declared bankrupt

30th November 2010, Comments 0 comments

A Moscow court on Tuesday declared the bankruptcy of a leading commercial bank that is run by a man whom the Russian media once identified as being "the cashier to the Kremlin."

The bankruptcy of International Industrial Bank (Mezhprombank), controlled by Russian tycoon Sergei Pugachev, came less than two months after its operating license was suspended by the Russian Central Bank.

It was the first such suspension in Russia since the 2009 financial crisis, with the Central Bank accusing IIB of failing to report accurate account data and being unable to satisfy its creditor obligations.

The bank's temporary administator told the Moscow arbitration court that the bank had assets of 62.2 billion rubles (2.99 billion dollars) and liabilities of 92.825 billion rubles, the RIA Novosti news agency reported.

The bank's "risky credit policy led to its insolvency," it quoted the bank's temporary administrator as telling the court.

The presiding judge set a six-month time limit on the bank's bankruptcy proceedings, which will be overseen by Russia's Deposit Insurance Agency, the Interfax news agency said.

Analysts have long warned that Russia faces a major shake-out of its banking sector as smaller institutions grapple with the consequences of their bad loan portfolios.

IIB's Pugachev is a man whom the Russian media have identified as being a close personal friend of Putin who financed various Kremlin programmes in the past.

Forbes estimated Pugachev's wealth at two billion dollars in 2009, but the 47-year-old failed to make the magazine's latest ranking after suffering badly from that year's financial crisis.

Pugachev's difficulties have forced the Kremlin to abandon its efforts to back the financier, Russian media reports said, with the bank falling victim to a series of police raids this month.

© 2010 AFP

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