Jul 05

Bailing out Moscow (The Moscow News, July 4, 2011):

The Bank of Moscow received the biggest bailout in Russian history after a Central Bank review uncovered bad loans totaling $9 billion, a third of the bank’s assets.

The $14 billion rescue package was issued after VTB bank uncovered the bad debts following a hostile takeover of Russia’s fifth largest bank earlier this year.

VTB accused the bank’s former management, led by Andrei Borodin, of “fraudulent lending,” and Finance Minister Alexei Kudrin demanded a criminal probe.

Borodin, a close ally of former Moscow Mayor Yuri Luzhkov has fled Russia and a warrant has been issued for his arrest. Luzhkov used Bank of Moscow to fund property projects in the city.

In a statement issued in London, Borodin said he was shocked at the size of the bail-out, and claimed that VTB’s takeover of the bank was politically motivated.

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