**VTB Ready to Restructure Russian Railways’ Debt Amid Central Bank Conditions**
Russian banks, led by VTB, are open to restructuring the debt of Russian Railways, provided the central bank maintains current reserve requirements for these loans. VTB’s CEO, Andrei Kostin, shared insights during a recent interview, emphasizing the importance of the central bank’s stance in facilitating this process.
As reported, the Russian government is exploring strategies to support Russian Railways, which is facing a staggering debt of 4 trillion roubles. VTB, the largest creditor to Russian Railways, is actively engaged in weekly discussions with government officials and central bank representatives to address the financial challenges facing the railway operator.
Kostin stated, “Banks are prepared to restructure loans and defer payments, as long as the central bank does not raise reserve requirements.” The central bank has previously allowed banks to restructure corporate loans starting in 2025 without requiring an increase in reserves, contingent on timely debt servicing and a three-year financial plan from the companies involved.
Currently, creditors of Russian Railways are urging the central bank to extend this restructuring measure into the upcoming year. Kostin highlighted the central bank’s capability to maintain reserves at their current levels, which could enable the postponement of interest payments for Russian Railways.
In a significant development, creditors have dismissed a proposal to convert 400 billion roubles of Russian Railways’ debt into equity. Kostin explained that such a conversion is complex and not favored by the central bank, which discourages investments in non-core assets. He noted that the largest banks are unlikely to pursue this option due to capital challenges.
Kostin attributed the financial difficulties of Russian Railways to high interest rates and the company’s obligations to the state, particularly regarding investments in the railway network and support for unprofitable cargo operations. He cited the example of coal exports to China as a loss-making venture, suggesting that the coal could be redirected to power data centers in Russia instead.
“The transportation of coal to China at a loss is not viable when there are opportunities to establish energy-intensive data centers near coal power stations,” Kostin remarked, highlighting the potential for cryptocurrency mining as an alternative use for the coal.
As the situation unfolds, banks are awaiting a comprehensive financial plan from Russian Railways to assess the viability of debt repayment strategies.
**FAQ**
*What is the current financial situation of Russian Railways?*
Russian Railways is grappling with a significant debt of 4 trillion roubles, prompting discussions among banks and the government about potential restructuring options to alleviate financial pressures.
