Russia frets over failure of its private lenders

Moscow

AS Russia's second-biggest private bank implodes, its billionaire owners have been conspicuous by their absence.

By leaving Bank Otkritie to fend for itself, the four shareholders controlling more than a third of the company - their combined fortune valued at over US$20 billion - may be giving the authorities little choice but to swoop in with a rescue. Now, the central bank could be left holding the bag as it reportedly considers taking control of the troubled lender amid a run on its deposits. "Minority owners are typically less incentivised to provide support," said Alexander Danilov, a Fitch Ratings analyst. "The magnitude of outflows is too big for them to cover, plus I imagine their wealth is mostly stakes in companies and not cash." While private banks have been on the defensive since the regulator began a purge in which over 300 firms have lost their licences, some tycoons have stepped up to keep their institutions afloat. The chief executive of billionaire Mikhail Gutseriev's Safmar Group said its B&N Bank may be recapitalised by a total of 25 billion rubles (S$582 million) this year. In 2004, the owners of Alfa-Bank JSC provided US$800 million as customers pulled funds, stemming the panic.