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Russia's Central Bank Steps In To Rescue Troubled Lender

Otkritie is believed to be Russia's largest private bank with 3.6 million clients and more than 400 branches throughout the country. (file photo)

Russia's central bank said on August 29 that it was stepping in to save the country's eighth largest lender, Otkritie, after it suffered a sustained run on its deposits amid worries about its loan portfolio.

Otkritie is also Russia's largest private bank, according to its website, which says that it has 412 branches and 3.6 million private clients throughout the country.

The central bank said in a statement that it planned to become the bank's main investor and was taking measures to increase Otkritie's "financial stability."

The Vedomosti business daily reported that the bank hemorrhaged clients in June after its rating was lowered by a Russian ratings agency and it lost the right to work with state companies and pension funds.

Customer deposits shrank by 435 billion rubles ($7.398 billion), or 18 percent of the bank's liabilities as of 1 June 2017, the Moody's Investors Service said in a research note issued on August 17.

According to Vedomosti, Otkritie, which was founded in 1992, has assets of 2.45 trillion rubles ($41.67 billion). The daily called the central bank's intervention "the biggest case of a bailout in the history of the Russian banking sector."

It also said it is the first time a new consolidation fund has been used.

The fund was set up by the central bank and signed into force by President Vladimir Putin earlier this year.

The central bank would "provide financial support to the bank, guaranteeing the continuation of its activities," the statement said.

It said it was not introducing a moratorium on creditors' demands.

Based on reporting by AFP, Reuters, and TASS