Russia’s VTB Bank capital slides close to minimum

By bne IntelliNews October 4, 2024

The core capital adequacy ratio (N1.1) of Russia’s second-largest state-controlled bank VTB fell to 5.31% at the beginning of September 2024, close to the regulatory minimum of 4.5% excluding surcharges, Kommersant daily reports citing the bank’s financial reports.

VTB's capital adequacy ratios at the beginning of September 2024 are the lowest among all banks except those under bailout procedure. The ratio has been declining for six consecutive months, down by 1.3 percentage points, and came close to the threshold (5.125%) which is followed by a write-off of subordinated loans.

Kommersant reminds that VTB representatives previously told the press that the capital adequacy ratio is declining due to the bank's integration with Financial Corporation Otkritie, which involves the transfer of clients and the loan portfolio.

However, VTB has another major merger ahead of it, with the planned consolidation of the Postal Bank.

The analysts surveyed by Kommersant do not rule out that the bank may need additional capitalisation, or will have to restructure assets to improve the risk coefficients. Dividends from subsidiaries might also help VTB improve its capital.

Previously in 2022 The bank had a RUB300bn capital injections approved with the state’s stake in the VTB’s capital decreasing from 76.4% to 61.8% as a result of two additional share issues. In addition, VTB as a state-bank is involved in recapitalising troubled state infrastructure assets, such as the United Shipbuilding Corporation (USC or OSK).

#capital #Russia #banking #VTB #capital #sanctions #profit

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