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KIT Finance eager to slash liabilities threefold by mid-year

April 24, 2009 | RIA Novosti via Banki.ru

RIA NOVOSTI. By the middle of 2009 KIT Finance Group’s obligations to creditors will be reduced 3-fold to Rub 50 bln following debt restructuring measures, the company said in a press release quoting the group’s chief executive Yury Novozhilov as saying. “Primary asset restructuring steps are planned to be taken by the end of the second quarter. Upon fulfillment of the obligations to creditors the group’s assets and liabilities will be cut from Rub 150 bln to Rub 50 bln. Also the bank’s equity will be slightly reduced, but the capital adequacy ratio will comply with CBR requirements and business needs," the press service cited Novozhilov.

A plan of actions, the core of which is to sell non-core assets to ensure that all funds owed to creditors be paid, was worked out by Russian Railways Co., whose structures control KIT Finance Group. Since October 2008 RRC within a consortium of investors has performed relevant work to stabilize the bank’s activities, providing the lender with greater stability. Further development of the bank relates to the restructuring of non-core assets.

The restructuring procedure calls to divesting an equity stake in Rostelecom, the portfolio of mortgage loans and securities, and other non-core assets. The key phase is the state taking an interest in Rostelecom as a strategically important asset for the consolidation of the Russian telecommunications industry. The fair value of this asset will be assessed by an independent appraiser.

A final decision by the bank’s shareholders on the financial support to be provided by the Deposit Insurance Agency (DIA) should be taken by the Bank of Russia and DIA. The agency is planned to carry out a set of measures to monitor the course of executing the program for rehabilitating the lender on the part of investors and the bank, and will also provide the lending institution’s shareholders with funds to replenish KIT Finance’s current liquidity during the asset sale period, the bank said in the press release.

KIT Finance expects resources to be given to its shareholders to equal 10% of the group’s total obligations. The funds provided will be paid back within the established deadline once non-core assets find new owners. Longer term, the lending institution is planned to focus on SME lending, the issue of bank cards and the promotion of retail financial products. The business plan calls for expanding the bank’s market share in key business areas by the end of the year.

Company: KIT Finance Investment Bank

Full company nameKIT Finance Investment bank
Country of riskRussia
Country of registrationRussia
IndustryFinancial institutions

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