Thursday, October 29, 1998 Published at 16:24 GMT
Business: The Economy
Russia's Inkombank closes
Inkombank's doors will stay closed unless foreign creditors help
The tumbling rouble left another victim in its wake with the collapse of Russia's second largest bank.
Russia's Central Bank revoked the license of Inkombank after it effectively went into liquidation as a result of the financial crisis.
But the Central Bank did not rule out the possibility of reorganising Inkombank if it could find Russian and foreign lenders prepard to bail the bank out.
The decision to revoke the license came two days after Inkombank's head, Vladimir Vinogradov, resigned.
Vinogradov was a prominent member of the so-called Russian oligarchs who have amassed vast wealth and have privileged access to the Kremlin.
The Central Bank said: "The Bank of Russia was forced to take this measure as the significant fall of the rouble rate and the massive demand for money to be returned to clients led to a sharp deterioration in the financial situation of Inkombank."
In August, the major US investment bank Lehman Brothers attempted to seize Inkombank's offshore assets in a court action in London.
Lehman hoped to recover about $90m from the move. Lehman said it would take a $60m charge against earnings due to volatility in Russian markets.
The company also sought to recover money owed to its clients.
The Central Bank said that Inkombank had taken excessive risks ahead of the August 17 devaluation and that its obligations had shrunk its asset base.
Inkombank was heavily exposed by the government's decision to default on state debt. Some 11% of its assets were made up of the treasury bills still frozen by the government.
The Central Bank said a series of Inkombank properties and assets would be impounded, and that it would now be placed under the Central Bank's administration.
A liquidation committee will look at how to put up its assets for tender.
Inkombank has about 10,000 corporate and private shareholders, including Russian natural gas giant Gazprom, several metallurgical enterprises, oil exporter Nafta Moskva and the European Bank for Reconstruction and Development.
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