The owner of B&N Bank, Russia's 12th-biggest lender by assets, has asked the Central Bank for a bailout less than a month after another leading Russian bank had to be rescued.
The Bank of Russia and B&N Bank announced on September 20 that the lender asked for financial rehabilitation through the newly created Fund for the Consolidation of the Banking Sector.
"We will make a decision on this issue in the near future," the Central Bank said in a statement.
B&N Bank is part of the Safmar Group, a holding that also includes oil and property companies and is owned by tycoon Mikhail Gutseriyev, his brother Sait-Salam Gutseriyev, and his nephew Mikhail Shishkhanov.
The bank embarked on an expansion drive in recent years, buying smaller lenders such as Rost Bank before merging in 2016 with MDM Bank.
Shishkhanov, who was named the chairman of B&N Bank, said in a statement that problems at Rost Bank and MDM Bank "turned out to be much more serious than we had believed" in tough markets.
"Our objective is, with the support of the Central Bank.. to conduct an effective financial rehabilitation of the bank," he also said.
B&N Bank's assets account for 2 percent of the Russian banking system, according to the Fitch ratings agency.
Fitch wrote in an analysis in early August that B&N Bank resorted to using expensive Central Bank funding in June and July, suggesting that it had cash-flow problems.
In late August, the Central Bank stepped in to save Russia's largest private lender and eighth-largest bank overall, Otkritie, amid fears over its stability following a sharp drop in customer deposits.
The Central Bank took over Otkritie and said it may need up to $6.9 billion, the biggest-ever bailout in Russia.
The Russian banking sector continues to bear the consequences of the financial and monetary crisis of 2014, caused largely by the crash of oil prices and aggravated by Western sanctions imposed over Moscow's aggression in Ukraine.
The financial health of some banks also worsened after they were forced them to make more rigorous provisions for nonperforming loans, while banks' margins tightened due to declining interest rates.
However, market insiders say large state-controlled banks that dominate the sector remain solid.
With reporting by Reuters, AFP, and TASS