Troika receives $150m boost ahead of Russia 'bad debt peak'

Financial News

Jason Corcoran in Moscow
17 June 2009

The European Bank of Reconstruction and Development has approved a $150m (€108m) five-year loan for Troika Dialog as part of package to fortify Russian banks against a second wave of bad debt, which is expected to spike in two months' time.

The loan comes three months after South Africa’s Standard Bank took a 33% stake in the Moscow investment bank in a $200m deal, which increased the bank’s capital base to $850m.

The IFC, the World Bank's investment arm, last week announced plans to invest $200m to buy stakes in Russian banks struggling with a second wave of bad loans. Banking analysts in Moscow have forecast that non-performing loans could hit 20% by the end of year. The Russian Central Bank maintains that bad loans are unlikely to exceed the threshold of 10% to 12% of the banks' total loan portfolio.

A spokesman for the EBRD in Moscow said: “We have already committed $500m in subordinated loans to Russia’s banking system and to boost their capital bases. A total of $5bn has been designated to Russia, which represents a 20% increase.”

Pavel Teplukhin, president of Troika Dialog, yesterday told the Prime-Tass press service the problem of bad debt in Russia's banking sector will hit a peak during August to September. “At that time, the problem of bad debt will intensify, and it will be necessary to make a decision on the capitalisation of Russia's banking system,” he said.

A spokeswoman for Troika Dialog in Moscow said the $150 loan from the EBRD would support the bank’s trading and brokerages activities and reduce its dependency on the repo-market for short-term lending. "The funds received from Standard Bank are aimed at the development of our commercial banking business."

The facility will consist of two separate tranches and the funding will support Troika’s trading and brokerage activities.

The EBRD, which has previously invested $35m in Troika’s private equity arm, opened a three-year credit line in November 2007 worth $100m. A spokesman declined to comment on the terms of the new loan.

The new loan, which will consist of two separate tranches, require a single repayment at maturity.

Troika, which is currently re-organising its business lines to integrate it with the Standard’s Moscow-based operations, has cut costs and staffing by 35% since last Autumn’s bank crisis.