Russia’s Bad Asset Bank Could Handle Debt Problems in Crisis, CEO Says

The bad-asset bank Trust, which was designated to hold $27 billion of troubled assets from a record rescue package for three non-state banks in 2017, could become the institution to handle debt problems during the current pandemic and future crises, the bank’s CEO said this week, according to

The bad-asset lender, created when a group of Russia’s biggest private bank collapsed, sees the twin shocks of plunging oil prices and global economic pain wrought by the coronavirus pandemic as a chance to expand. 

“There’s every reason to believe that the number of problem assets in 2020 will grow significantly,” Bank Trust Chief Executive Officer Mikhail Khabarov said in an interview last week.

“Creating a special-situation fund that’s outside of the banking sector would be the right move for the economy, especially because there are bad assets not only at banks but also at state companies,” Khabarov added. He plans to pitch the idea to Trust’s supervisory board, which includes central bank and Finance Ministry officials.

Russia’s government has reserved $17.8 billion for virus-relief measures and “anti-crisis events,” Prime Minister Mikhail Mishustin said at a government meeting by video link with President Vladimir Putin on Wednesday. Fitch Ratings lowered its forecast for Russian banks last week, saying their ratings will depend on state support for the sector.

Measures by the central bank and government intended to limit the growth of bad debt may help but won’t be able to eliminate the problem, Khabarov said.

Tougher social isolation measures announced Sunday are set to hit the economy of the world’s biggest energy exporter as oil trades below $30 a barrel. A nationwide lockdown could cause Russia’s economy to shrink by as much as 10% this year, according to analyst forecasts.

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