VTB CEO says Russian banks are ready to restructure some Russian Railways debt

VTB is the largest creditor of Russian Railways

Creditors involved in debt restructuring talks

Central bank reserve requirement ratios play a key role in loan restructuring

Conversion of debts into shares was rejected by Russian Railways’ creditors

Written by: Elena Fabrichnaya and Gleb Bryanski

Russian banks are ready to restructure some of Russian Railways’ debts as long as the central bank does not increase reserve requirements for these loans, VTB CEO Andrei Kostin said in an interview with Reuters.

Russia’s government is discussing ways to support Russian Railways, the country’s largest commercial employer and with a debt pile of 4 trillion rubles, Reuters reported on Nov. 25.

VTB, Russia’s second-largest bank, is Russian Railways’ largest creditor, and the bank’s top executives are involved in weekly talks with the government on how to deal with the debt. Central bank officials also attend these meetings.

“Banks are ready to restructure loans and postpone payments, provided that the central bank does not increase reserve requirements for these loans,” Kostin said. he said.

The central bank allowed banks to restructure loans to corporate borrowers from 2025 without requiring a corresponding increase in their reserves, provided the debt is paid on time and companies present a three-year financial plan.

Kostin said Russian Railways’ creditors have asked the central bank to extend this measure until next year.

“The central bank has the ability to do this. It can keep reserves at the current level and allow us, for example, to postpone interest payments on Russian Railways to a later date,” he added.

Kostin said that Russian Railways’ creditors rejected the proposal to convert the company’s 400 billion rubles debt into shares, and that this idea was brought up at government meetings.

“Converting debt into equity is a very complex process for banks. The central bank opposes such investments in non-core assets and this is a capital challenge for banks. The largest banks will not pursue conversion,” Kostin said.

He said that behind the monopoly’s financial situation were high interest rates and Russian Railways’ obligations to the state to maintain investments, especially when it came to developing the railway network in the Far East and supporting loss-making cargo operations in some regions.

Citing the export of Russian coal to China by rail as an example of a loss-making operation, Kostin suggested using coal to generate and supply energy to data centers in Russia.

“For example, today data centers that need energy can be built near coal power plants, while there is no point in transporting coal to China at a loss. Cryptocurrencies, such as bitcoin, can be mined,” Kostin said.

He said that banks are now waiting for Russian Railways’ financial plan.

“The question is what kind of financial model Russian Railways will present and whether the company will be able to pay off all this money in three or five years. This issue is currently being worked on,” he said.

This article was generated from an automated news agency feed without modifications to the text.