Bank of Moscow, which has been at the center of a takeover battle, has a hole in its balance sheet of 212 billion rubles ($7.57 billion), including a recently issued $1.1 billion loan to businessman Vitaly Yusufov for the purchase of 19.9 percent in the bank, Kommersant business daily said on Tuesday.
The paper quoted the results of a central bank check, saying that the loan issued to Yusufov was risky as it was not used in accordance with its stated purpose of "forming cash flow for bank guarantee" and was not properly collateralized.
Yusufov bought the shares from Bank of Moscow's former managers led by Andrei Borodin in the midst of a takeover by Russia's second largest bank, state-run VTB earlier this year.
The former management of the bank, which was the capital's investment vehicle under the previous mayor Yury Luzhkov, strongly opposed the acquisition by VTB.
"VTB would likely prefer that he (Yusufov pay) back the loan when receiving money for his stake, but it is hard to estimate what VTB will want to pay for an additional 20 percent stake given that the bank has virtually zero equity," Troika Dialog investment house said in a research note.
President Dmitry Medvedev fired Luzhkov last fall over a lack of trust. Borodin has fled Russia and is wanted on an international arrest warrant, although he denies any wrongdoing.
VTB now owns 46.5 percent of Bank of Moscow, which was awarded a record 295 billion rubles of state bailout at the start of July. VTB, which will also have to pump 100 billion rubles in Bank of Moscow, has to hold 75 percent in the bank to qualify for the state aid.
The bank had underprovisioned 21 out of its 31 large loans, including a loan to Premier Estate company, a source close to Bank of Moscow told RIA Novosti late on Monday. Local media reports claim Premier Estate belongs to Luzhkov's wife Yelena Baturina, owner of the Inteco construction group.
