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Russian central bank signals no bailout for brokers after Univer request

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By Reuters

-Russia’s central bank appeared to spurn brokerage Univer Capital’s request for a rescue on Monday, saying its current bailout mechanism applied only to banks, insurance companies and non-state pension funds.

Univer Capital earlier asked the central bank to bail it out to protect investors’ rights and prevent the firm and those who have funds invested with it from going bankrupt, according to an open letter from the brokerage.

The central bank said in a statement it did not comment on individual companies, but gave a list of businesses currently covered by its bailout mechanism that did not include brokerages. It did not provide any further comment.

After Russian markets reopened last week with prices of OFZ rouble treasury bonds falling, Univer, a mid-sized brokerage, faced margin calls that triggered mandatory OFZ sales by the National Clearing Center (NCC), creating a loss.

The open letter, seen by Reuters and addressed to central bank Governor Elvira Nabiullina, said that on March 24-25, the NCC also sold Russian sovereign Eurobonds held by Univer on behalf its clients.

“In order to protect investors’ right and avoid bankruptcy of a systematically important brokerage Univer Capital and the following bankruptcy of companies and citizens … we request a bail out for Univer Capital,” the letter said.

According to Univer, Russian residents have 1,742 brokerage accounts with the company, another 358 accounts are held by Russian firms and the remaining 57 accounts by foreign firms.

As of Feb 18, Univer held securities worth over 40 billion roubles ($454 million) on its own account and on behalf of clients, with more than a half invested in OFZ rouble bonds and Russian sovereign Eurobonds.

($1 = 88.1750 roubles)