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Thread: Russian Subordinated Debt default to tune of €500 million Owed in Dublin

  1. #1
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    Default Russian Subordinated Debt default to tune of €500 million Owed in Dublin

    One wonders who are the 'qualified investors' who will be hit for this half billion default by a Russian bank (legal default on subordinated debt) . The entire sector continues to roll on in good old "wild west" style. And the ODCE lacks even the basic complement of Inspector Plods who were previously employed to reel in 'white collar criminals". With spectacular lack of success.

    (Reuters) - Russia's bailed-out bank Otkritie will not repay $500 million of loans raised in Ireland, potentially making it harder for other Russian private banks to borrow abroad and casting a cloud over Dublin as a "shadow banking" hub.
    Otkritie's refusal to pay sees shockwaves from Russia's biggest ever bank bailout reach Ireland, which has been used by international firms including Russian banks to raise hundreds of billions of euros in such loans.
    In a stock-exchange filing on Tuesday, OFCB, a vehicle that had issued $300 million of loan notes and lent the proceeds to Otkritie, said the Russian bank had "terminated" the repayment of the debt and more than $7 million of interest.
    BKM Finance, another vehicle that borrowed $200 million on behalf of Otkritie, made a similar filing on Oct. 27, saying the bank could not repay the money and interest of $4.7 million.
    A spokeswoman for Otkritie said it had "grounds to terminate its obligations related to subordinated instruments" and that it had acted in accordance with the law.
    Russia's central bank, which orchestrated a multi-billion dollar rescue of Otkritie after a run on the bank, had earlier warned that subordinated debt could be hit. [L8N1LI2X2]

    Also potentially at stake is Ireland's shadow banking system, which has boomed since the financial crisis and given groups such as hedge funds increasing clout in global finance.
    The International Monetary Fund and Financial Stability Board, which monitors the financial system, have highlighted concerns over Ireland's outsized financial sector.
    The country is one of the euro zone's largest centers for financial special purpose vehicles, according to central bank data, many of which are used to borrow by international groups.
    The sector had total assets such as loans of 345 billion euros ($402 billion) in the middle of this year - bigger than the Irish economy. Russian companies have sponsored 14 percent of those vehicles in Ireland.
    But fund raising by companies such as Otkritie, poses a potential threat to Ireland's standing, said James Stewart of Trinity College Dublin who has written a report on the issue.
    "In terms of Ireland's reputation, these cases indicate a problem," said Stewart.
    "It reveals the absence of regulation and oversight of this important market. They create a systemic risk, if not to Ireland, then internationally."

    The Irish Stock Exchange, which listed the debt, declined to comment, while a spokeswoman for Ireland's central bank said the debt issues were restricted to "qualified investors" and that it had approved the prospectuses.
    http://uk.mobile.reuters.com/article/amp/idUKKBN1D22J9
    “ We cannot withdraw our cards from the game. Were we as silent and mute as stones, our very passivity would be an act. ”
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    Default Re: Russian Subordinated Debt default to tune of €500 million Owed in Dublin

    I thought you'd be rejoicing in capitalists taking a hit. They're big boys I wouldn't worry about them. I'd worry more about Ireland's reputation.


    This is, in part, US sanctions against Russia starting to bite, in part a consequence of Venezuela's debt restructuring. Russian banks have become more deeply exposed to Venezuela as Chinese and Indian banks have stepped away Otkritie, Russia's largest private bank was bailed out to the tune of $6.5B over the summer. Russia's Central Bank considers it the country"s 'best" private bank. That probably signals more trouble on the horizon in the Russian banking sector.


    https://financialtribune.com/article...nking-industry



    https://www.bloomberg.com/news/artic...6-billion-risk
    As a general rule the most successful man in life is the man who has the best information.

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    Default Re: Russian Subordinated Debt default to tune of €500 million Owed in Dublin

    Is there a Russian banking crisis on the horizon?

    And if so, what are the ramifications for Europe?

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    Default Re: Russian Subordinated Debt default to tune of €500 million Owed in Dublin

    Quote Originally Posted by Fraxinus View Post
    Is there a Russian banking crisis on the horizon?

    And if so, what are the ramifications for Europe?
    There is. And I would add in London to Europe, for the avoidance of any doubt.

    These failures are going to make it harder for Russian banks and investors to raise money, which in itself will push the banking sector into crisis.

    US long term strategy to the contintental mass as a competitor should be presumed to be to weaken it, using economic, diplomatic / military means.

    Perhaps someone else can fill in on who is most exposed to Russian debt. Ireland being most heavily indebted per capita is least able to absorb any further shock in the European economy.
    “ We cannot withdraw our cards from the game. Were we as silent and mute as stones, our very passivity would be an act. ”
    — Jean-Paul Sartre

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