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5 Feb, 2009 14:22

Russian Government unveils more funds for banks

The Russian government is to provide 400 Billion Roubles – about $11 Billion – in additional funding for Russian state and private banks.

Announcing the move on Thursday, Prime Minister Vladimir Putin said state-owned VTB will get around $5 Billion, Vnesheconombank will receive around $2.5 billion and another $2.5 Billion will be available in subordinated loans to private banks.

Putin said that in the next few months the government will significantly enlarge its share in tier 2 commercial banks’ capital. The state will support them in the form of long-term subordinated loans.

“We think it inexpedient for the government to have a direct access to tier 1 bank capital, which means we don’t plan to buy the stock of private banks. First of all, the owners must bear the responsibility for their institutions, they shouldn’t hide behind the back of the state. Secondly, the Government’s entry into their capital could lead to a violation of rights of minority shareholders.”