Russia

Russia signed an agreement to restructure $3.15 billion of debt owed by Venezuela, throwing a lifeline to a crisis-wracked ally that’s struggling to repay creditors, Bloomberg News reported. The pact gives Venezuela some much-needed breathing room as it faces the much more complicated task of restructuring its $140 billion of bonds and foreign loans. For Russia, the deal underscores the costs that come with President Vladimir Putin’s geopolitical ambitions across the globe. A $900 million hole had been left in its 2017 budget plan by Venezuela’s failure to pay on time.

Rosneft, the world’s largest listed oil producer, has reported a lower than expected 81 per cent annual rise in net profits in the third quarter and falling free cash flow thanks to a spending spree on acquisitions, the Financial Times reported. The Kremlin-controlled company said net profit rose to Rbs47bn ($792m) in the third quarter, thanks to a rise in global oil prices and an increase in production. But free cash flow fell 83 per cent to just Rbs8bn, because of higher spending and upstream expenses.

Russia risks having to bail out more banks owned by large industrial groups unless there is rapid consolidation, VTB First Deputy Chief Executive Yuri Solovyov said. Two of Russia's biggest banks, Otkritie and B&N, have had to be taken over by the central bank in the past two months after a liquidity squeeze, the International New York Times reported on a Reuters story. Such "pocket banks", a post-Soviet phenomenon which involved industrial groups needing their own banking wings to finance business, are still common in Russia, but some are struggling.

Russia and Venezuela may sign an agreement on restructuring Venezuelan debt by the end of the year if terms drafted by their finance ministries are approved, said Russian Finance Minister Anton Siluanov. “In general, we worked out with the finance ministry such conditions,” Siluanov told reporters in Washington, where he attended the International Monetary Fund fall meeting, Bloomberg News reported.

Russia’s B&N Bank, which is being rescued by the central bank, said on Wednesday it will write off subordinated debt worth $226.56 million owed to its shareholders, Reuters reported. B&N - the second bank to be rescued by the central bank in less than a month after Otkritie - does not have publicly traded subordinated debt in issue, unlike Otkritie where some of the junior debt will be written off during the bail out.

The failure of two big Russian lenders within a month has cast doubt on how much longer a phenomenon of the post-Soviet financial system, the "pocket bank", can last. The practice of conglomerates running their own banks grew out of the early days of Russian capitalism in the 1990s. But with authorities now purging a sector beset by bad debts, owners are trying to get rid of their remaining pocket banks and finding few willing buyers, if any, the International New York Times reported on a Reuters story.

Russian private air carrier VIM Airline has faced a severe economic adversary and has asked the state for financial aid with a possibility of going into a receivership, the company said on its social media accounts on Monday. The company, top 10 among the Russian airlines, also known as VIM-AVIA, has cancelled or delayed dozens of flights for the past few days, Reuters reported. “Unfortunately, we have to state that the VIM-AVIA airline has been faced with a hard economic situation.

The nationalization of Russia's biggest private bank sounds anachronistic: There's no global or regional financial crisis, and the latest World Bank report on the Russian economy described the country's financial sector as "largely stabilized," with about 10 percent non-performing loans, a lower level than in Portugal, Italy or Ireland, a Bloomberg View reported. But the fate of the Otkritie financial group is not really about traditional banking problems. It's about the state's oversized and still growing role in the Russian economy. One could tell Otkritie's story as a purely financial one.

As Russia’s second-biggest private bank implodes, its billionaire owners have been conspicuous by their absence, Bloomberg News reported. By leaving Bank Otkritie FC to fend for itself, the four shareholders controlling more than a third of the company -- their combined fortune valued at over $20 billion -- may be giving the authorities little choice but to swoop in with a rescue. Now the central bank could be left holding the bag as it reportedly considers taking control of the troubled lender amid a run on its deposits.

Russia laid the groundwork for an operation that will reduce some of its closest and biggest dollar bond payments before the end of the year, Bloomberg News reported. The Finance Ministry has permission to swap up to $4 billion of debt maturing in 2018, 2028 and 2030 into new notes, according to a decree published on the government’s website on Tuesday. The price of the exchange won’t exceed the current market value, according to the decree. The swap aims to lower Russia’s debt load and servicing costs and reduce the volume of payments owed before 2019, the decree said.