Russia’s second largest bank VTB said Tuesday it has received 100 billion rubles ($1.8 billion) from the country’s national welfare fund, part of a plan to recapitalise the banking system hit by the falling ruble and Western sanctions.
“VTB confirms that today the bank has been provided with 100 billion rubles” – the first tranche of a 250 billion ruble deposit planned by the government, said the state bank, which was targeted with sanctions over Moscow’s meddling in Ukraine imposed by the United States and the European Union.
The decree allotting the sum published on the Russian government’s website said the money has been deposited for 30 years with the interest rate set at inflation plus one percentage point.
The public funds must be used to “finance profitable infrastructural projects,” the government said.
The national welfare fund is a mammoth pile of money accumulated over the years of high oil prices, when Russia made billions of dollars through its energy exports.
VTB said the deposit puts its capital adequacy ratio at 12 percent. The other 150 billion rubles is expected in the first quarter of 2015, it said.
The bank in October filed a lawsuit in the Court of Justice of the European Union to contest the sanctions, which prevent European entities from lending to the bank – one of several hit with similar measures.
Russia’s Finance Minister Anton Siluanov indicated last week that a similar policy will be followed with another giant state bank Gazprombank, which will receive 70 billion rubles in the coming days.
The swift fall of the ruble earlier this month has pressed the central bank to sharply hike its key rate and parliament has approved a plan to recapitalise the banking system in order to continue lending in the battered economy.