Promsvyazbank is considering the possibility of buying Northern Sea Route Bank (SMP Bank), Kommersant writes, citing sources familiar with the situation. According to the publication’s interlocutors, the parties have been discussing the deal since December 2021, and in early 2022 PSB conducted due diligence of SMP Bank, which took about two months.

Neither analysts nor market participants are willing to estimate the amount of the deal, including due to the total closure of information on the banking sector, primarily on the sub-sanctioned banks, the publication notes.

SMP Bank has been engaged in the rehabilitation of Mosoblbank since May 2014. According to one of Kommersant’s sources, together with SMP Bank, PSB “may in fact get its own pocket bank of bad assets” represented by Mosoblbank. During the financial rehabilitation procedure, banks are not obliged to comply with the Central Bank’s mandatory ratios, which “provokes the bailout bank’s desire to transfer its own bad assets to its balance sheet”.

Promsvyazbank is owned by the state through Rosimushchestvo. The bank was created on its basis to service large state contracts and state defense orders. PSB already has experience in acquiring other banks. For example, in December 2019 it bought Svyaz-bank from VEB, and in early December 2020 it acquired 100% of the shares of Roskosmosbank being sanitized from the state corporation Roscosmos. Moscow Industrial Bank is expected to be merged with Promsvyazbank no later than May 2023.

PSB and SMP Bank are under blocking sanctions imposed by the United States. They provide for the “freezing” of assets in the United States, as well as a ban on American citizens from conducting any transactions with the bank.