Russian State-Owned Bank Wants Cash Boost: Report

Russian state bank VEB, Moscow's agent in distributing some of its $200 billion crisis rescue package, has asked the government for an injection of 950 billion roubles ($34 billion), Vedomosti reported on Wednesday.

Citing two unnamed government sources, the business daily said VEB's head Vladimir Dmitriyev had written to Prime Minister Vladimir Putin on Nov. 6 asking for the capital injection.

Putin, who chairs VEB's board, asked the heads of the central bank, the Finance Ministry and the Economy Ministry to look into the matter and report back by Dec. 6, the paper said.

The capital injection is required to shore up the bank's own balance sheet, which has been stretched by administering Moscow's rescue package, Vedomosti reports.

The paper said the Economy Ministry declined to comment on the issue, while Dmitriyev would neither confirm nor deny that he had written the letter. VEB is the government's agent for state share purchases.

IT is also entrusted with distributing 450 billion roubles of subordinated loans to banks and $50 billion of foreign debt refinancing aid to companies as part of Moscow's rescue package for the economy and the financial markets.

Dmitriyev told reporters on Monday the bank needs more capital and could soon ask the government for "hundreds of billions of roubles". Vedomosti quoted a source at VEB as saying not all of the capital injection would need to be in the form of cash.

"It would be possible for some of the obligations to be covered by state guarantees," the source said.

The amount involved is equal to 7.6 percent of Russia's gold and foreign exchange reserves. Vedomosti quoted a source at the Finance Ministry as saying the requested figure was too high.

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