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Russia's state-owned Vnesheconombank (VEB) is in talks to buy Globex bank,
Russia's state-owned Vnesheconombank (VEB) is in talks to buy Globex bank, which has defaulted on some of its obligations to clients, a Russian business daily reported Friday.

Globex, a midsized bank with a significant number of clients, blocked Tuesday early withdrawals from fixed-term deposit accounts for five days.

Kommersant said that VEB, the national development bank, was holding talks on a deal to take over Globex, which would follow its rescue of Svyaz Bank from bankruptcy in early October. That deal was the first big bailout involving a retail bank since the Russian financial sector was hit by the global credit crunch.

Last Friday, the government pledged 75 billion rubles ($2.85 billion) to VEB to buy up "problem banks."

Globex is among Russia's 50 largest banks. As of October 14, the balance on its current and fixed-term deposit accounts was more than 20 billion rubles, a 15% drop on September.

"The authorities are afraid that Globex's bankruptcy could provoke a run on other banks, which would have dire consequences for the financial market," the paper quoted an expert as saying.

It said that to avoid such a scenario, the government could give VEB more funds specifically to bankroll the Globex deal.

Neither VEB nor Globex executives have commented on a possible takeover.

Analysts have said problems with liquidity experienced by the Russian banking sector could trigger a wave of consolidations, and reduce the number of lending institutions in Russia by a third.


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