Russia’s central bank to form biggest non-state pension fund with $9 billion merger: sources

FILE PHOTO:A man walks past the logo of Russian bank Otkritie in Moscow
FILE PHOTO: A man walks past the logo of Russian bank Otkritie in Moscow, Russia August 30, 2017. REUTERS/Sergei Karpukhin/File Photo - RC1C1CF4AB20

December 14, 2017

By Tatiana Voronova and Elena Fabrichnaya

MOSCOW (Reuters) – Russia’s central bank is preparing to merge three pension funds of bailed out bank Otkritie to create the biggest non-state pension fund in Russia, while guaranteeing payouts to their 7.7 million members, three people with knowledge of the matter said.

The funds had been indirectly controlled by Otkritie Holding, the former parent of Otkritie bank. Once Russia’s largest private lender, it was rescued in August by the central bank, which was then lumbered with the three pension funds too.

The Russian central bank has since increased the estimate of the overall cost of the bailout, which includes the three pension funds, Lukoil-Garant, Eletroenergetiki and RGS, to 456 billion rubles.

The former owners of Otkritie bank, led by the holding company’s chief executive Vadim Belayev, failed in an attempt to merge them to form the biggest non-state pension fund in Russia with funds under management of 519 billion rubles ($9 billion).

Two people close to the two funds and a person close to Otkritie, which declined immediate comment, told Reuters that the central bank has decided to merge the three funds.

The central bank declined to comment on the plan, which will result in a pension fund larger than that of top lender Sberbank <SBER.MM>, which has 430 billion rubles under management.

It was not immediately clear why the central bank would merge the funds, other than potential synergies, although one of the people said the new structure would make it easier for Otkritie bank’s new head, Mikhail Zadornov, to manage.

The central bank has said that it planned to sell the financial assets it was cleaning up – Otkritie bank and B&N bank – once they return to the financial health.

(Reporting by Tatiana Voronova and Elena Fabrichnaya; writing by Katya Golubkova; editing by John O’Donnell and Alexander Smith)