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Russia: Banks Merge As Chernomyrdin Attempts To Form Cabinet

Moscow, 25 August 1998 (RFE/RL) - Three top Russian banks announced their merger today amid concerns that part of the banking sector is on the verge of collapse due to the country's on-going financial crisis. In a statement cited by Itar-Tass, Oneximbank, Menatep bank and Most bank said they planned to form a holding company into which each of the banks will contribute 51 percent of its charter capital. The banks are rated fourth, seventh and seventeenth in Russia in terms of assets and are part of the business empires of three of Russia's most powerful business tycoons.

Meanwhile, Moscow Mayor Yuri Luzhkov said today that eight to ten leading banks in Moscow will pool their resources to protect the savings of Muscovites from Russia's financial turmoil. He did not provide more details.

Russian government spokesman Vadim Birkin said Prime Minister-designate Viktor Chernomyrdin has approved a plan to restructure the government's $40 billion short-term debt. Aleksandr Pochinok, head of the government's financial department, said the government would offer several options and that foreign and domestic investors would be treated equally. The announcement of the terms of the deal, which has already been postponed twice, is expected later today.

Chernomyrdin is pressing with his attempts to form a new government. Meeting his political supporters in parliament, Chernomyrdin said that Russia needed "a government of accord" in which ministers are chosen on the basis of their professional qualities. The Communists -- the largest faction in the Duma -- have long called for a coalition government but President Boris Yeltsin has ignored their calls.

Also today the Russian ruble plummetted against the U.S. dollar on the official Moscow Interbank Exchange. The ruble fell from 7.14 to the dollar at the start of trading to 7.86 before noon, when trading was suspended for a second time to try to brake the currency's fall. Just a week ago, the ruble stood at 6.2 to the dollar.

For more information about Russian banks, see Russia's Financial Empires.