OREANDA-NEWS. March 20, 2009. The Russian government decided to speed up the process of increasing the capitalization of VTB, No. 2 state-run lender, and in anticipation of the latter’s additional share issue the government is to float a RUB 200 bn subordinated loan to the bank, a source close to the bank said. The government’s anti-crisis plan, the draft version of which was released on Thursday, calls for providing in 2009 RUB 500 bn in subordinated loans to Sberbank, RUB 200 bn to VTB, RUB 130 bn to VEB and RUB 225 bn to commercial banks. Earlier the state was expected to raise VTB’s capital by purchasing its RUB 200 bn SPO.

“VTB needs cash right now and, therefore, the bank will first take a subordinated loan and then pay it back after the SPO,” a source close to the bank said. Getting cash into the capital in the course of an SPO is more time-consuming than taking a subordinated loan, as the former requires registration of an additional share issue, stock placement, payment and registration of an SPO report, which could take several months. Meanwhile, a subordinated loan could be executed within a month.