The First Major Russian Bank From The Top 10 Became Unprofitable

Because of multi-billion dollar loan defaults.

Moscow Credit Bank, which is closely linked to Rosneft, became the first of the top 10 largest banks in Russia to become unprofitable.

MCB, which ranks 7th in Russia in terms of assets and has about 700 billion rubles of individual deposits on its accounts, received a net loss of 9 billion rubles, Interfax reports with reference to the bank's statements. The main losses occurred in December - 8.2 billion rubles. Nevertheless, at the end of the year the bank remained in profit, although it reduced its size by a third - 21.1 billion rubles.

The problems at MKB arose in the middle of the year: in January-September the volume of overdue loans on the bank's balance soared by 700% to 668 billion rubles, or 28% of the portfolio. According to a source "Kommersant", the problems in the bank were discovered by the Central Bank's inspection, after which the management of MKB was changed.

In general, Russian banks ended the year with a profit of 3.5 trillion rubles. Compared to last year, however, it decreased by 300 billion rubles due to credit losses. According to the Central Bank, at the end of October, 11.2% of corporate loans worth 10.4 trillion rubles and 6.1% of retail loans worth 2.3 trillion rubles became problematic.

Because of non-payments, which affected the military-industrial complex, metallurgists, builders and even oil and gas companies, Russia de facto has a "banking crisis," according to experts of the Center for Macroeconomic Analysis and Forecasting, which is close to the government.

This crisis is taking place in a "latent form," the CMACP emphasizes, as banks restructure bad loans and the banking system is dominated by the state. Last year, state-owned banks received an infusion of 1.02 trillion rubles from the National Wealth Fund, which, according to the CMACP, can be seen as "emergency additional capitalization."

Founded by billionaire Roman Avdeev, Moscow Credit Bank entered Rosneft's orbit in 2017, when it was on the verge of bankruptcy along with other banks in the "Moscow ring" - FC Otkritie, Binbank and Promsvyazbank. "Rosneft de facto rescued the bank by pouring money into its capital and placing long-term deposits for a term of 2066. The company also transferred reverse repo deals worth hundreds of billions of rubles to MKB, with the help of which it financed its operations.

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