Sovcombank decided to withdraw frozen assets from its balance sheet – Kommersant

Sovcombank shareholders at an extraordinary meeting on July 17 approved the reorganization, including the allocation of assets frozen due to sanctions. Liabilities to foreign creditors will be removed from the bank’s balance sheet and transferred to a new legal entity – Assistance to International Settlements LLC. The procedure will be tentatively completed by the end of the third quarter of 2023, according to a bank press release received by Kommersant.

Thus, Sovcombank became the first systemically important player to use the new scheme for getting rid of toxic assets and liabilities proposed by the authorities in 2022. At the same time, the bank did not disclose how much sanctioned assets and liabilities were removed from the balance sheet.

“This will allow the bank to simplify work with blocked assets and debts to unfriendly creditors, as well as reduce the effect of creating reserves in relation to blocked assets and will have an insignificant impact on capital, liquidity and standards,” commented Sergey Khotimsky, First Deputy Chairman of the Board of the Bank, his words are quoted in the press release.

In May, Deputy Chairman of the Bank of Russia Olga Polyakova announcedthat one of the systemically important banks in Russia has already separated blocked assets into a separate legal entity. She did not give the name of the bank at the time.

According to the possibility proposed by the Russian authorities, sanctioned banks can form a new legal entity and transfer assets frozen due to restrictions to it. Legislators this year simplified for banks, the withdrawal of assets frozen abroad into a separate legal entity.

According to market participants, the total volume of banks’ assets frozen abroad may reach up to 3 trillion rubles, reserves for them can amount to hundreds of billions of rubles.

Read more in the publication “Kommersant” “With frozen on the legal entity”.

Maria Fedotova