Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Report Sends Russians Scrambling for Savings

Russians, fearful of losing their savings, have rushed to Vneshekonombank's Moscow office to get back their foreign currency savings frozen for the past two years.

The bank, in charge of all international transactions during the Soviet era, froze all accounts when it went virtually bankrupt in late 1991.

Albert Balebanov, an adviser to the bank's board of directors, said Monday that the rush started when an Izvestia report Friday announced that personal accounts had been unfrozen as of April 12. While that was accurate, Balebanov said the report mistakenly created the impression that the bank would stop servicing all accounts as of May 1.

As soon as the paper hit the stands, rows of people lined up at the bank, fearful of losing their savings if they did not get the money out in time.

Balebanov said there is no deadline for private individuals to retrieve their money. The accounts of Russian citizens were opened April 12, but citizens of the other former Soviet republics will have to wait until July 1, the date originally planned for opening personal accounts.

Balebanov said the bank had decided to start paying back Russians early since it had received the necessary government funds.

Thousands of Soviet citizens who had worked abroad were obliged to put their savings into foreign currency accounts at Vneshekonombank.

An estimated $9. 6 billion in personal accounts, as well as those of foreign and Russian companies, is frozen in the bank. Under a separate plan worked out for paying off corporate depositors, the bank will issue bonds in May that will offer a gradual payback over as much as 15 years.

Personal accounts held in currencies of former allies in Central Europe will be paid out at $1 for every Central European currency unit, regardless of the denomination or its current value. Accounts on earnings from Third World countries will be paid out at $1 for every five currency units.

Most of these currencies were not convertible on the world market when the accounts were frozen and have lost value. The Polish zloty, for instance, is now exchanged for over 15, 000 zlotys to the dollar.

Balebanov said the special rates had been calculated to compensate holders of accounts for losing access to their money for so long.

As of May 1, Vneshekonombank will limit all of its operations to paying out the foreign currency accounts, servicing debts and commercial loans and managing the bonds promised to company account holders.