"International financial club" Mikhail Prokhorov mired in losses

IFC Bank has been showing a loss for five consecutive years.
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The International Financial Club Bank (IFC), whose 93.4% stake is controlled by billionaire Mikhail Prokhorov, in 2019 became the leader in losses among Russian banks that did not go through the rehabilitation process. This fact was noticed by the head of the analytical department of BKF Bank Maxim Osadchiy. The loss of the bank after tax amounted to 3.4 billion rubles, follows from its quarterly reporting under RAS. The leader in losses in 2019 was the Moscow Industrial Bank, being rehabilitated through the Bank Sector Consolidation Fund (117 billion rubles), being rehabilitated by VEB Svyaz-Bank (17 billion rubles) and Baltinvestbank (3.6 billion rubles), being redeveloped by Absolut Bank

The bank showed the largest loss in the fourth quarter of 2019 - 2.8 billion rubles. In the first three quarters, the loss did not exceed 270 million rubles. Losses of the bank at the end of the year are associated with the formation of reserves for losses, explains Maxim Osadchiy - IFC reserved 2.4 billion rubles, of which 1.6 billion fell on corporate loans. In the fourth quarter, IFC also became a leader among Russian banks in terms of recapitalization. Shareholders increased their capital by 600 million rubles in November and by 2.45 billion rubles in December. Most likely, the reserves were accrued during the scheduled inspection by the regulator, which ended on January 17, 2020, Osadchy suggests. Now the bank's capital adequacy ratio (H1.0) is at a comfortable level - 16.5% with a minimum without surcharges of 8%.

The press service of the bank said that the causes of losses were the creation of a reserve for the loan portfolio, the sale of assets at a discount, and the revaluation of property not used in core business. The bank specified that the assistance from the shareholder was in non-cash form, but in which they did not specify.

The bank has been unprofitable over the past five years, Osadchy notes. In 2015, IFC's loss amounted to 19.4 million rubles, in 2016 - 3.9 billion rubles, in 2017 - 1.4 billion rubles, in 2018 - 3 billion rubles.

For the past two years, IFC has been actively clearing distressed assets from its balance sheet. This was noted by the rating agency Expert RA, which in May 2019 raised the bank's rating by one notch to ruBB. The agency rated IFC’s market position as weak, but noted that the shareholder has repeatedly provided assistance to the bank in previous years. In total, in 2016-2019, 10.65 billion rubles were spent on recapitalization of the bank, it follows from the calculations of Maxim Osadchy based on Russian reporting. In addition, in the spring of 2018, the bank conducted an additional issue of 2.8 billion rubles.

IFC’s troubled assets are partly foreign currency loans, which worsened after the devaluation of the ruble in 2014, and partly loans of large manufacturing and development companies, whose financial situation has worsened, including due to the situation in the economy after 2014, says the junior director according to Expert RA bank ratings Maria Zinina.

Mikhail Prokhorov is the main shareholder of IFC. He directly owns 83.6% of the bank’s shares, another 9.8% through the Cyprus offshore Onexim Holdings Limited. The second major shareholder is Ekaterina Ignatova (6.5% of the shares), wife of Sergey Chemezov, CEO of Rostec State Corporation. IFC takes 105th place in terms of assets for the third quarter of 2019, according to the Interfax-100 rating.