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Tatagroprombank may convert subordinate bonds to shares

February 17, 2017 | Prime

The tier-1 capital adequacy ratio of Tatagroprombank, Russia’s 384th largest bank by assets as of January 1, has been below 5.125% for more than six consecutive operating days, which allows the bank to convert subordinate instruments and bonds into shares, as seen by PRIME in the central bank’s materials late on Thursday.

The minimal allowed tier-1 capital adequacy ratio is 4.5%, but the central bank’s regulation allows banks to convert indefinite subordinate instruments into common shares if the ratio stays below 5.125% for six or more consecutive operating days within a 30-day period.

On December 20, the republic of Tatarstan-based Tatagroprombank introduced a 10,000 ruble per day limit on early withdrawal of deposits, and started redeeming no more than 50,000 rubles per day if a deposit expires. The bank said it introduced the measures due to an “information attack on banks” and said it will lift the restrictions after its problems are solved.

On December 15, the central bank introduced a three-month moratorium on satisfaction of claims of creditors of one of Tatarstan’s largest banks, Tatfondbank, and appointed the State Agency for Deposit Insurance as temporary administration. On December 23, similar measures were taken against Tatarstan’s Intechbank.

These decisions triggered turbulence in the banking industry of the republic, as Tatfondbank is tightly connected with several local banks, including Bank Sovetsky, Timer Bank, Tatagroprombank and Radiotechbank. Tatfondbank also used to operate as a sponsor in the Visa and MasterCard international payment systems for Altynbank, Intechbank and Tatagroprombank.


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