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Russian Banks Foreclose on Pigs, Lingerie
As defaults soar, banks stuck with weird collateral
By Jason Farago
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Posted Oct 26, 09 6:21 AM CDT
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(Newser)
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With loan defaults soaring, Russia’s banks have had to seize a lot of collateral lately—and we’re not talking about houses. By year’s end, 20% of Russian loans could be non-performing, by Moody’s estimate. In order to recoup those losses, the banks have accepted controlling stakes in a lingerie retailer and a food store—and in one case, 40,450 pigs, Bloomberg reports.
Banks aren’t happy about the situation. “We have no idea how to build roads, milk cows or pour metal,” said the head of one bank. “We’re finance professionals.” The problem is especially bad at the state-run banks, where strange collateral backs as much as 20% of the loans, according to one banker. “State banks are burdened with social responsibility,” says another bank exec. But “even they can’t afford to give money away.”