Trust Bank is to receive a bailout from the Central Bank of Russia despite the best efforts of the Hollywood hardman.
The continued degeneration of the Russian economy since the collapse of crude oil prices has led to the first bailout of a bank, which has used Willis in its advertisements for the past 4 years. The Central Bank will inject 30 billion rubles, equivalent to $531 million, into struggling Trust Bank, which is Russia’s 16th largest by deposits. Other investors are needed to complete the bailout.
Trust Bank bailout: The first of many Russian banks?
The Wall Street Journal claims that Trust Bank grew because of increased consumer spending when oil prices were high, but came into difficulties when the economy slowed down. Russians have understandably been spending less, and many are not keeping up loan repayments.
Further bailouts are expected due to low oil prices and Western sanctions imposed on Russia after the invasion of Eastern Ukraine. These sanctions mean that Russian banks and corporations are unable to borrow money on the international markets, a significant problem when they have already borrowed hundreds of billions of dollars in foreign currency.
In order to avoid a rash of bailouts, the government is currently working on a law which would see 1 trillion rubles ($16.5 billion) of capital pumped into the financial sector. The main lesson here is that the Russian economy is far too reliant on high oil prices, and Western sanctions may finally be making Putin regret his decision to invade Ukraine.
Payback for Putin
This may only be the beginning of a prolonged period of economic hardship for Russia, which may vindicate those Western politicians who pushed for sanctions as punishment for Putin’s actions in Ukraine. For a long time many commentators decried the fact that the Russian President had seemingly got one over on his Western counterparts, a conclusion which seems a lot less certain now.
In October Trust Bank released a statement on the latest advertising campaign to feature Bruce Willis, which told how “our capable hero will be seen dealing with force majeure with his trademark panache and wit, all the while helping customers with difficult financial decisions.”
One of the slogans for the campaign saw Willis claiming: “When I need money, I just take it,” and bank executives are presumably now regretting their decision to encourage reckless borrowing, or even worse, theft.