Bank of Moscow receives Russia's largest bailout of $14.2 bn

Russia's fifth largest bank, Bank of Moscow, has been given a record the $14 billion bailout package, the largest ever in Russian history. bank had once assumed a quasi-government status, functioning as a prime investment vehicle of Moscow's city government under former mayor Yuri Luzhkov, involving big city development projects.

The Russian central bank said the Deposit Insurance Agency would provide Bank of Moscow 295 billion roubles ($10.6 billion) at a negligible rate of interest of 0.51 per cent for 10 years.

Another Russian bank, VTB, which holds a 46.5-per cent stake in Bank of Moscow through an earlier hostile bid, will contribute 100 billion roubles to recapitalise Bank of Moscow, the central bank said in a statement.

This will also result in VTB's direct stake in Bank of moscow rising to 75 per cent, enough to qualify for state aid. The Russian government now holds a 75-per cent stake in VTB  after infusing a $6.4 billion bail out package during the financial crisis.

With 381 offices, Bank of Moscow's branch network covers practically all major economic centers in Russia from St Petersburg and Kaliningrad in the West to Vladivostok and Yuzhno-Sakhalinsk in the East. As of 1 June 2011 apart from 140 offices in Moscow and the Moscow region, the bank operated 241 points-of-sale across the country.

It owns four overseas subsidiary banks - BM Bank (Kiev, Republic of Ukraine), Bank Moscow-Minsk (Minsk, Republic of Belarus), AS Eesti Krediidipank (Tallinn, Estonia) and Bank of Moscow j.s.c. - Belgrade (Republic of Serbia).