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UPDATE 1-Russia's Sberbank in talks with Rusal on debt restructuring deal-sources

Friday, 24 Jan 2014 | 4:52 AM ET

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DAVOS, Switzerland, Jan 24 (Reuters) - Russian state lender Sberbank is negotiating with aluminium company Rusal on a debt restructuring deal to help the company weather low aluminium prices, two banking sources told Reuters on Friday.

Loss-making Rusal has been hit by the weak aluminium price and maintaining net debt levels of around $10 billion.

"The model has been broadly agreed ... We cannot afford the world's largest producer to fail," one of the sources said.

Rusal declined to comment. Sberbank could not be reached for immediate comment.

In 2010, Sberbank took on a loan made by the state to Rusal during the financial crisis. It is now worth around $4.6 billion and matures in September 2016.

The loan is secured against Rusal's stake in Norilsk Nickel , the world's leading miner of nickel and palladium.

"If aluminium prices remain low, the debt is to be repaid over 20-30 years; if they go up, then the cashflows will allow Rusal to redeem everything within five years," he added.

(Reporting by Dmitry Zhdannikov; additional reporting by Polina Devitt, editing by Elizabeth Piper)