Russia hit by US$3.4b Promsvyazbank bailout in latest bank blow

Moscow

RUSSIA'S central bank may have to sink up to US$3.4 billion into its bailout on Friday of Promsvyazbank (PSB), the country's 10th largest private lender, the third such rescue this year.

The bailouts mark the biggest challenge to Russia's financial sector since a financial crisis 20 years ago and show how the country and its banks are grappling with the economic impact of lower oil prices and Western sanctions.

PSB's rescue follows the central bank bailout in August of Otkritie, once the country's largest private bank, and later B&N Bank.

The central bank has increased its estimate for the cost of the earlier bailouts to 820 billion roubles (S$18.8 billion).

Vasily Pozdyshev, a deputy governor with the central bank, said on Friday that the bailout of PSB will require between 100 billion roubles and 200 billion roubles, b…