Russia buys 40bn roubles of shares in Gazprombank

http://www.theguardian.com/world/2014/dec/31/russia-shares-gazprombank

Version 0 of 1.

The Russian government has bought shares in Gazprombank, the latest support for a banking sector suffering from western sanctions over the Ukraine crisis and a sharp economic slowdown.

Gazprombank said the government had bought 39.95bn roubles (£435m) of its preference shares on Tuesday, using money the bank had returned to the country’s National Wealth Fund (NWF).

“The conversion allows the bank to strengthen its capital structure and provides for sufficient scope to expand its operations,” the bank said, adding that preference shares were non-voting and therefore would not affect the voting rights of current shareholders.

Russia’s government is stepping up efforts to support large banks and state companies as the economy slides towards recession and a currency crisis gathers momentum, threatening to shatter the economic stability on which President Vladimir Putin’s popularity partly rests.

Russian banks are reeling from the plunge in the rouble, which prompted a spate of withdrawals as people rushed to convert their savings into hard currencies, while sanctions imposed over Ukraine have raised banks’ funding costs.

The finance minister, Anton Siluanov, said last week Gazprombank was seeking 70bn roubles from the NWF, one of two rainy-day funds that count as part of Russia’s international reserves.

Another state lender, VTB Bank received 100bn roubles from the NWF this week, and expects a further 150bn roubles by the end of the first quarter of 2015.

Last week Russian authorities also significantly scaled up rescue funds for the medium-sized lender Trust Bank.