The biggest bail-out in Russian history is given to fifth largest bank of Russia, Bank of Moscow. After another bank, VTB got the control with the help of hostile bid the resuce of $14bn came in. this was done only to uncover the bad loans which valued $9bn that is the one third of the bank’s assets.

Andrei Borodin the former head of Bank of Moscow has run away from the country, and now his arrest warrant is issued. The ex Moscow Mayor Yuri Luzhkov used this bank for funding property projects. Last year Russian President Dmitry Medvedev fired Mr. Luzhkov.

In London in a statement, Mr. Borodin said seeing the size of bail-out he got shocked and also claimed that the takeover of the bank by VTB was politically motivated. There is a charge from VTB on Bank of Moscow for Fraudulent lending, under the control of Mr. Borodin. Alexei Kundrin the Russian finance minister has asked for a criminal investigation.

As per the rescue deal it is decided that the Russian central bank will give 295bn roubles as a loan to Bank of Moscow for 10 year at negligible rate of interest. And further in the mean time, VTB will invest 100bn roubles for the recapitalization of the bank by taking the ownership share of it from 46 percent to 75 percent. This percent of share is enough to qualify for state aid.