By Guy Faulconbridge and Mike Dolan
DAVOS, Jan 29 (Reuters) - Russia's second-largest bank, VTB , may issue preference shares later this year as part of a 200-billion-rouble ($6.02 billion) state recapitalisation, VTB Chief Executive Andrei Kostin told Reuters on Thursday.
Russia is discussing ways to recapitalise major banks, which have been badly hit by an economic crisis that has hammered the country's stock, bond and currency markets.
"There is no final decision yet on the size of the capitalisation. We think that 200 billion roubles would be the right decision," Kostin told Reuters at the World Economic Forum in Davos.
"The capitalisation is linked to an additional share issue which takes about half a year in Russia, so we think the decision should be taken now," he said. "There are different options including the issue of preference shares."
Kostin said he hoped VTB could break-even for 2008 under international accounting, but that it was too early to forecast 2009 results.
He said non-performing loans totalled about 3.8 percent but VTB was using forecasts for bad loans for 10 percent, for planning purposes.
"The worst scenario is up to 10 percent," he said. "The reason for the crisis in the Russian banking sector is quite different to in the West. In Russia, a major problem is the inability of companies to return debts."
VTB has to pay about $7 billion in foreign debt this year and will seek to refinance some of it, he said.
"We will negotiate for refinancing but we think we will have enough liquidity for this year," Kostin told Reuters Television.
"Frankly speaking, this year it will be very difficult for Russian companies to find funding abroad, with the exception of major companies who have a state guarantee, or some of the oil companies," he said.
ROUBLE, CAPITAL FLIGHT
The majority of the Russian rouble's devaluation is now done but it is unlikely to strengthen again for at least a year, he said, adding that he expected further capital flight from Russia this year, but thought things would improve in 2010.
The gradual devaluation of the rouble would help the economy in the meantime, he said.
"The majority of the devaluation has been done and it will help a lot the Russian economy, particularly exporters," Kostin told Reuters.
"There is no evidence why the rouble should be stronger over the next 12 months or even 24 months, but over the long term there is a chance it will come back to previous levels."
Kostin said VTB had nominated a candidate for the board of Norilsk Nickel to back its large exposure to the world's top nickel miner.
"We have proposed our candidate to the board," he said. "Norilsk is a of course a good company and its shares are valuable but the company needs serious development."
State-controlled VTB holds a stake in Norilsk, Russia's largest mining company, as collateral for a major loan to billionaire Vladimir Potanin.
Kostin declined to discuss different ideas being discussed by Russian officials about building one of the world's biggest metals companies on the base of RUSAL, Norilsk and other miners. For full coverage, blogs and TV from Davos go to http://www.reuters.com/davos ($1=33.21 Rouble) (Editing by Mike Peacock and Simon Jessop)