Russia’s Bank Otkritie skips Oct. 26 payment in connection with plan

By Caroline Salls

Pittsburgh, Nov. 17 – PJSC Bank Otkritie Financial Corp. did not make the payment due Oct. 26 on its 2012 notes subordinated loan agreement because of a plan of participation being implemented for Otkritie by the Bank of Russia, according to a news release.

However, loan notes issuer OFCB Capital plc said Otkritie confirmed that no bankruptcy event has occurred.

OFCB Capital said the Bank of Russia approved a plan of its participation in supporting Otkritie, under which the latter will receive funds to sustain liquidity and capital replenishment, ensuring its financial stability and fostering its further development.

As a result of Otkritie’s recapitalization, the Bank of Russia will become a shareholder of Otkritie with a share of not less than 75%.

According to the release, all payments of interest and accrual of any interest on Otkritie’s subordinated debt were terminated on Sept. 15.

In addition, OFCB Capital said Otkritie is not in compliance with a minimum capital adequacy ratio established by the bank of Russia.

However, the company said the non-compliance is temporary, and Otkritie’s common equity tier 1 capital adequacy ratio will be restored so that it may meet and even exceed the minimum requirements set by the Bank of Russia following a capital increase by the Bank of Russia to a level necessary to fully comply with all of Otkritie’s obligations and achieve its strategic goals.

The missed payment and covenant non-compliance triggered events of default on the loan agreement, the release said.

In a separate release, OFCB Capital said Otkritie “has not stopped its activity for a single day, continues to operate its business in the normal mode, meets its obligations and conducts new transactions.”

The Central Bank of Russia provides financial support to Otkritie and guarantees the continuity of its operations, the issuer said.

OFCB Capital said Otkritie’s loan tied to its 7Ľ% loan participation notes due 2018 is not subordinated and is not subject to a write-down in accordance with the legislation of the Russian Federation.

As a result, OFCB Capital said Otkritie intends to continue to perform its obligations under the loan agreement.

The financial company is based in Moscow.

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