As a result of 2018, Vostochny Bank received a profit of 4.4 billion rubles against 3.2 billion rubles last year, it follows from the reporting on international standards. But the bank's statements are full of notes by the PwC auditor about the potential risks to the bank's capital.
On thin ice
First, Vostochny has deferred tax assets worth 9.3 billion rubles, which is almost 40% of the capital. Deferred assets are formed in periods of loss or low profit of the bank. This amount can be used by the bank in the future, when it comes out in profit. To use this asset, the bank needs to get a profit of more than 46 billion rubles. If the bank does not receive this profit in the future, then this asset will burn, which will lead to a decrease in the bank's capital, the auditor warns.
Basel III requirements for calculating Tier 1 capital should exclude all deferred tax assets that exceed 10% of the index, notes Moody's junior vice-president Peter Paklin (East). The Agency also uses this practice in its methodologies.
The press service of the bank said that if the auditors recognized this asset, they believe in its disposal. "The bank has a business plan that confirms the ability to use this profit in the coming years," the bank assured.
Secondly, the bank has an investment property in the amount of 8.8 billion rubles, which is comparable to 37% of the bank's capital, Paklin says. The valuation of its value may not coincide with the real value in the market, it is said in the statements that the bank's management acknowledges. And often the revenues from such investments are not obvious, as practice on the Russian market shows, Paklin adds.
It should also be taken into account that the banks create increased reserves for real estate, which increase in direct proportion to the time of its stay on the balance sheet, specifies the deputy director of the group of bank ratings ACRA Mikhail Polukhin. This ultimately affects the capital.
Thirdly, since 2018 the bank has moved to a new standard of international reporting IFRS 9, which recalculates reserves. These changes will lead to a significant decrease in the bank's equity capital, which is recognized by the bank's management itself.
In 2017, the bank transferred Eurobonds with a maturity of $ 125 million in 2019 to the status of indefinite securities, which helped it to raise its first-tier capital by 7 billion rubles. The head of the group of bank ratings ACRA Kirill Lukashuk called the restructuring of this kind of crisis measure.
Vostochny Bank ranks 37th in terms of assets, amounting to 321 billion rubles, according to Interfax-CEA. Deposits of citizens in the bank are 142 billion rubles.
Bank Vostochny is 51.62% owned by the private equity fund Baring Vostok, which is investing in projects of the countries of the former USSR. The Fund entered the capital of the bank in 2010 and from 201 is looking for a buyer of the bank, wrote Kommersant. 32% belongs to the director of the new business direction of the Agency for Strategic Initiatives Artem Avetisyan, the rest to various individuals.
In early 2018, it became known about the forthcoming capitalization of the bank for 5 billion rubles. As Kommersant wrote, all shareholders of the bank will participate in the capitalization. Before that, Baring Vostok had already poured 2 billion rubles into the bank in 2015. According to the press service of the bank, there were no demands from the Central Bank for capitalization, thoughts about it arose against the backdrop of the desire to develop business. Now the bank carries out the registration of the transaction and expects to replenish the capital not earlier than autumn, the press service says.
"For a large fund, the rehabilitation of the bank, in which it invested considerable funds, would be a noticeable blow from the standpoint of reputation. Perhaps this is one of the reasons for Baring Vostok's active participation in the capitalization of the bank, "believes Stanislav Volkov, head of the validation department of the rating agency Expert RA.
By the summer of 2016, Avetisyan and Baring Vostok had an idea of setting up a federal bank to work with small and medium-sized businesses on the basis of four banks: Uniastrum Bank, Orient Express, Credit Europe Bank and SME Bank. The combined machine to support entrepreneurs planned to get into the top 15. But we managed to unite only the first two banks, after which the project stopped.
The main shareholder of Uniastrum Bank Artem Avetisyan earlier proposed to establish on the basis of four lending institutions - the state SMEs of the Bank and private Uniastrum Bank, "Orient Express Bank" and Credit Europe Bank - a supporting credit organization for small and medium-sized businesses. While this idea has not found support of the authorities, a number of participants of the banking market doubt the possibility of such unification.