In the Bank “Peresvet” has revealed new schemes of abuse

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Bank “Peresvet” used in its activities, numerous “grey” schemes, including circumvention of the requirements of the Central Bank, found RBC. An example of such activities – transaction “Peresvet” Bank

The loan guarantee

As told RBC two sources in the banking market, familiar with the state of Affairs in the troubled Bank, the financing from Alfa-Bank “Peresvet” drew about a year ago. The sum amounted to 5.4 billion rubles., the loan of steel purchased for securities and the Deposit from the “Relight”. In itself, this funding is not uncommon, but in this case, attention is drawn to the unusual details of the transaction: in particular, according to sources RBC, the amount of the security Deposit is almost 100% covered for the size of the loan.

Traditionally, the amount of the security Deposit varies depending on credit quality and liquidity of pledged asset and typically last up to 50%. “The structure of the transaction, when in the presence of security in the form of securities, the borrower gives another 100% Deposit raises serious questions about the real target nature of the transaction,” — said Vice-President of FBK Alexey Terekhov. “This is an unusual deal — he agrees to Treasurer of a large Bank. — I have not heard that the borrower is totally and not partially guaranteed loan, capping attract funding Deposit 100%.”

Open forward

Peresvet have used a product of Alfa-Bank under the name of “Open forward” (presentation of this product is at the disposal of RBC). It gives you the opportunity to obtain financing at Alfa-Bank for the purchase of securities with leverage and with an obligation to repurchase.

Confirmation that the transaction was designed in the form of a forward contract with a security Deposit can be traced in the statements of the “Peresvet” in accordance with IFRS for the year 2015 and first half 2016: it confirms the existence deliverable forward contracts amounting to about 5 billion rubles and security Deposit of same amount. Thus, according to the statements, contracts with securities “represent transactions with one Bank with a rating of BB+ from Fitch, as a result of which the Bank has an obligation to repurchase bills of exchange of third parties.” A rating of BB+ rated “Alfa-Bank” by Fitch to the Bank in August 2015.

Thus, the number of securities, purchased by Alfa-Bank in the interests of “overexposure” were mostly “bill third party” (and, according to sources RBC, in part, the bonds of large issuers). According to sources RBC, promissory notes represent obligations of the borrowers of the “Peresvet”. “It was a little-known company, their paper is difficult to call a liquid” — said one of interlocutors of RBC. To raise funds for these securities, said one of the sources, the market would be problematic because “Peresvet” and was forced to accept the extremely harsh conditions of alpha Bank as nearly 100% of the Deposit.

The developments around the “Peresvet”

4 Oct Fitch ratings has published a report in which it was reported that about 12 billion rubles (6% of the total assets of the Bank or 8.2% of the portfolio on 1 October 2016) of the Bank “Peresvet” are high-risk, as issued to borrowers, mostly with no real assets. According to Fitch, many of them showing signs of affiliation between themselves or with the management of the Bank. “The actual concentration and related-party lending may be higher than indicated in the statements. <> The long-term sustainability of the business in doubt as Fitch”, — noted in the message of rating Agency. The Agency also pointed to the fact that the refinancing risk of the Bank may increase due to the active involvement of funds in the financial markets.

From 14 to 19 October, the Bank “Peresvet” has produced a bond issue with a total nominal value of 2 billion rubles. Investors in the placement have not purchased any bonds.

On 14 October, the TV channel “Rain” reported the disappearance of the Chairman of the Board and minority shareholder Alexander Shvets. Thus a press-service of the Bank reported that Alexander Shvets is on treatment in a medical facility.

On 18 October, the Bank “Peresvet” imposed a limit on the issuance of deposits in the amount of 100 thousand rubles.

On 21 October, the Bank of Russia has appointed the Bank “Peresvet” interim administration.

22 October, the representative of the press service of the Bank of Russia told RBC that the Bank’s problem, according to preliminary data, linked to taken by the Bank of high risk through active lending projects in the construction industry faced in recent years from a serious drop in demand. According to the prospectus of issue of Eurobonds up to 40% of its loan portfolio was accounted for by loans to construction companies.

Treasurer of a major Bank on condition of anonymity, told RBC that about a year ago Peresvet have been asked to provide funding for their construction projects secured by promissory notes. “We refused the deal, it’s a risky business, in the event of a problem, not the fact that the owner will be able to repay the loan,” he said. Analyst at Moody’s Semyon Isakov indicates that the transaction financing on purchase of promissory notes are not common and are rare.

Alfa-Bank, however, argue that “the transaction was used promissory notes of companies with real assets (real estate in the form of land and buildings, estimated value exceeds the values of the bills, leading the actual construction)”.

The convenient scheme

The question is why he had used such a scheme. “A big plus of such transactions in the specifics of accounting: transactions and associated risks are not reflected on the balance sheet of the borrower,” says the senior Director of financial institutions ratings Agency Fitch Alexander Danilov. Thus, there is the opportunity to quietly for the Central Bank to Finance related companies and to avoid the accrual of reserves.

Another Fitch analyst Dmitry Vasilev does not exclude that the Bank “Peresvet” could use such a funding scheme related companies, in order not to violate the norm of N6 (set the maximum size of risk on one borrower or group of related borrowers not exceeding 25% of the capital). The maximum size of risk on one borrower or group of related borrowers on October 1, 2016 was “Peresvet”, according to official reports, of 20.2%.

Another version of the use of open forward made by the participants of the market: funds received by the companies that sold the promissory notes could then be injected into the capital of “overexposure” to bypass an outright ban on the capital increase of banks at the expense of borrowed funds. To monitor official statements, so it is impossible. However, the capital increase for “overexposure” was important to receive government support in the form of OFZ, say the bankers.

In any case, 100 percent of the Deposit has allowed Alfa-Bank to repay the loan in full, while other creditors together with the Bank decide the fate of the “Peresvet”.

From a review of Alfa-Bank, submitted to the journal of RBK, it follows that in October, when the problem of “overexposure” were well known, Alfa-Bank demanded to fulfill the contractual obligations — that is, to buy the paper. And since this was not done, is forcibly closed a deal to sell the mortgaged “Peresvet” bonds in the market and writing off in debt repayment of the Deposit. This was done after entering in the “Peresvet” of the interim administration. The bill, as explained in alpha Bank, has not been sold, remained on its balance sheet “at the highest received from participants of the market quotation”.

Taking into account the security Deposit and sold bonds Alfa-Bank “covered the whole debt, and the difference is 1 billion rubles was returned to the “closest distance”. Thus, the “Peresvet” and left without a Deposit and without securities. According to sources RBC, damages “Peresvet” from this operation in the form of written-off Deposit creditors are estimated at more than 5 billion rubles.

This is a substantial loss for “overexposure” in the first half of 2016, he earned about 2.8 billion rubles of net profit under IFRS.

“Individual” deal

Respondents RBC experts accurately called the deal “an individual”. “A key criterion that can serve as collateral that requires lender — said Danilov. — If it is 70-80% or more of the cost of the acquired asset, then the transaction likely is a fiduciary (feigned. — RBC) in nature and has no real economic sense.”

Partner at Baker Tilly Russia Elena Dmitrieva more careful in the estimates. “As the situation on the interbank lending market difficult, in these circumstances, banks have to raise Finance using different schemes. A transaction may be a market, but we cannot exclude other factors,” she said. However, she raises questions of the complex structure of the transaction and the fact that Alfa-Bank has agreed to take the balance of illiquid promissory notes. Elena Dmitrieva does not rule out that Alfa Bank was personally interested in the business of builders, or simply asked to support their business. “Or “closest distance” was necessary to remove bills from the balance sheet and Alfa-Bank, most likely, realizing that the probability that the loan will not be refunded, transferred the paper to itself on balance with a maximum guarantee,” — said the expert.

“It seems that everything was done with full understanding on both sides. Therefore, Alfa-Bank’s secured itself, demanding 100% coverage of the promissory notes, — adds the head of practice of investment attraction of KSK Grupp Joel Lautier. — As for reputation, something about the alpha Bank it is known that he is involved in such a complex and risky deals that no other credit organizations”. Lotje added that he thinks from a legal point of view or from the point of view of possible claims by the regulator for Alfa-Bank can be some consequences.

The situation may be changed a bankruptcy, if the license of the “Peresvet” will be withdrawn. “In accordance with article 61.2 of the bankruptcy law, the decision of the arbitration court can be challenged by suspicious transactions of the debtor. Under this category fall transactions, which marks the unequal counter-performance of obligations by the other party to the transaction and transactions made with the purpose of causing harm to property rights of creditors,” — said the Chairman of inter-regional arbitration court of Moscow and Moscow region the lawyer Oleg Sukhov. He points out that the arbitration court can be challenged and transactions entailing the provision of preference to one of creditors before others. According to him, even the possibility of reorganization of the Bank is not an obstacle for disputing transactions.

The Central Bank, appointed in Peresvet temporary administration, declined to comment.

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