Russian authorities significantly scaled up rescue funds for mid-sized lender Trust Bank on Friday, saying they would provide up to $2.4 billion in loans to bail out the first commercial banking victim of the country’s currency crisis.

A sharp slide in the rouble has prompted panic buying of foreign currency in Russia and a spike in deposit withdrawals, heaping pressure on a vulnerable domestic banking sector whose access to international capital markets had already been restricted by Western sanctions over Ukraine.

Trust Bank, which hired actor Bruce Willis as the face of a major advertising campaign, fell victim to the rouble's slide on Monday, when the central bank said Russia would provide up to 30 billion roubles ($540 million) to shore up its finances.

On Friday, the central bank said that loan would be replaced with another for up to 99 billion roubles over 10 years via the Deposit Insurance Agency, a state corporation, to cover the discrepancy between Trust Bank's assets and liabilities.

As much as 28 billion roubles will also be loaned over six years to Otkritie bank, which will oversee Trust Bank's rescue, making this the second-largest bank bailout in Russia's history.

Last Friday Russia’s lower house of parliament hastily approved a draft law to give the banking sector a capital boost of up to 1 trillion roubles, which banks are expected to receive from early next year.

The funds earmarked just for Trust Bank - Russia’s 32nd largest lender by assets according to Interfax data - are equivalent to almost 13 per cent of that figure.

Analysts said the bailout showed the central bank wanted to shore up confidence in the banking sector and that Otkritie would benefit from overseeing the rescue by receiving a cheap liquidity boost.

The central bank has also launched a drive to clean up the banking sector and has revoked the licenses of over 100 banks since the beginning of last year, bringing the total number of licensed banks in Russia below 1,000.

With Russia’s economy taking a nosedive, the pain for its banks seems certain to continue next year as consumer spending and earnings shrink.

The rouble rose on Friday to its strongest levels in more than three weeks after the government ordered exporters to sell some of their hard currency revenues. But the currency remains down 38 per cent against the dollar this year.

Trust Bank’s bailout is now Russia’s largest behind the 2011 rescue of Bank of Moscow, which cost the government almost 400 billion roubles.

Reuters