The Agency for Restructuring Credit Organizations, ARCO, is considering reanimating Rossisky Kredit Bank, ARCO officials said last week.

ARCO believes that Rossisky Kredit will be able to stand on its own by the end of 2001 after settling its accounts with private depositors. With agreements in place with the bank's major creditors, the stage is set for ARCO to begin returning Rossisky Kredit's assets to the bank, said Valery Miroshnikov, deputy managing director of ARCO.

However, the story may not have such a happy ending. Some creditors - primarily private depositors - still want to bankrupt the bank. Under Russian law, if that happens, the depositors will receive all of their assets within a year and a half, while budget and nonbudget funds would recoup up to half of what they are owed.

Private companies and foreign creditors would likely get nothing, due to lack of funds. Miroshnikov estimated that, in all, the bank's assets would fetch 30 percent to 35 percent less under bankruptcy than a careful restructuring.

To try to avoid that possibility, ARCO is also promising to return depositors' money within a year and a half. Depositors - who are owed a total of about 3.6 billion rubles -would get 10 percent of that within seven working days of signing onto the agreement. The rest would be converted into promissory notes, payable within one and a half years and subject to Central Bank exchange rates on Nov. 18, 1999.

ARCO's proposal to the government and nonbudgetary funds would see them recover their money over a six-year period, also per Russian law, with the condition that the bank must pay all of its current obligations on time. ARCO is currently in talks with the government about that proposal, Miroshnikov said.

Finally, companies and foreign creditors would get a somewhat shakier deal. Under ARCO's proposal, they would get a 5 percent payment up-front. Another 15 percent would be paid over three years if the debt is in rubles and over five years if the debt is in hard currency. The remaining 80 percent would be returned over a period of 10 years, but not in cash. Instead, creditors will get promissory notes, which could then be exchanged for new Rossisky Kredit convertible bonds.

Some foreign creditors are ready to discuss the idea, Miroshnikov said, though they have not yet signed on.

Although the plan would leave Rossisky Kredit paying off its debts for the next 10 years, it would not require ARCO to remain involved for that long, Miroshnikov said.

"The proposed system does not require that we manage the bank for the entire 10-year period," he said. "As soon as the bank is capable of working independently as a normal credit institution, ARCO may offer potential buyers shares in the bank."

Some of the foreign creditors have already expressed interest in becoming shareholders, or possibly trading some of their claims for shares, ARCO said in a written statement. Though ARCO would not say which companies in particular are interested, it said the idea had been discussed with the three co-chairs of the bank's foreign creditors' coordination committee, Hypovereinsbank, Baden Wuertenbergische Bank and London Forfaiting.

More than half of Rossisky Kredit's creditors are foreign, so their input is crucial to reaching a global settlement, Miroshnikov said.

In a precedent-setting move, ARCO has also broached the subject of the bank's so-called "nondeliverable" forward contracts. To work this out, Miroshnikov said, ARCO proposes transferring the bank's obligations under such contracts to a specially created company, along with the bank's claims on contractors. A register of both sides could be completed within 75 days of a global settlement, Miroshnikov said.

According to ARCO figures, Rossisky Kredit owes approximately $329 million, while it is owed $369 million.

"The bank's claims and the claims on the bank are roughly the same size, so fulfilling nondeliverable forward contracts will depend on how effectively the company collects its debts," Miroshnikov said.

If a settlement is reached, Impexbank - currently being used by ARCO as a "bridge bank" for Rossisky Kredit, managing the latter's assets and accounts - may be merged into Rossisky Kredit. ARCO has also said it would be willing to extend Rossisky Kredit a credit line to deal with cash shortages, possibly up to 500 million rubles, Miroshnikov said.

No decision is expected from creditors until after the winter holidays.

The plan for Rossisky Kredit comes on the heels of news that the creditors of Onexim Bank - which, along with Rossisky Kredit and many other banks, collapsed in the midst of last year's crisis - stand to receive upwards of $100 million up-front if they sign onto a proposed restructuring scheme.

Similar in structure to the program designed for Rossisky Kredit, the plan would give all of Oneximbank's creditors $100 million immediately, of the 25.4 billion rubles the bank owes altogether.