вторник, 11 ноября 2008 г.

Banks under watch


Law-enforcement bodies will monitor the use of bailout funds

The government continues to support the real sector of the national economy by lending cash to Russia’s largest banks. Sergei Ignatyev, chairman of the Central Bank of Russia, said yesterday that Sberbank had already received RUB 300 billion (approx. $11.1bn) from the planned subordinated loan of RUB 500 billion (approx. $18.5bn). At the same time, Prime Minister Vladimir Putin instructed law-enforcement agencies to control the use of state funds allocated as part of the government’s anti-crisis program. Banks receiving state support have been transferring more funds to foreign banks recently, Putin said at a government meeting with top law-enforcement officials and bankers on Monday.


Sberbank has already received RUB 300 billion (approx. $11.1bn) from the Central Bank’s subordinated loan of RUB 500 billion (approx. $18.5bn), according to Sergei Ignatyev, chairman of the Central Bank of Russia. Sberbank is due to receive a total of RUB 500 billion at an interest rate of 8 percent, and Vnesheconombank will get RUB 450 billion (approx. $16.7bn) at 7 percent, in turn lending RUB 200 billion (approx. $7.4bn) to VTB and RUB 25 billion (approx. $926m) to the Russian Agricultural Bank.


Meanwhile, the interbank lending market is stabilizing, as the declining amount of REPO operations shows. Banks borrowed only RUB 93 billion (approx. $3.4bn) from the Central Bank yesterday, out of the available RUB 125 billion (approx. $4.6bn). Longer-term loans are still in demand: banks borrowed RUB 94 billion out of the possible RUB 100 billion (approx. $3.48bn out of $3.7bn) at yesterday’s auction for three-month collateral-free loans. Overall, the situation on the market has been stable over the past two trading days, with interest rates at 5-6 percent, according to David Kiknadze, the head of the interbank lending department at MDM Bank.


“The government’s cash injections have improved the ruble liquidity on the market, but it is still too early to expect banks to lend to each other,” he reckons. Andrei Borodin, president of the Bank of Moscow, hopes for the expansion of the Central Bank’s refinancing program. “I hope that the Central Bank will consider refinancing possibilities for commercial banks under collateral of their debt obligations like promissory notes,” Borodin was quoted as saying by Prime TASS.


At a government meeting with top law-enforcement officials and bankers yesterday, Prime Minister Vladimir Putin assigned law-enforcement agencies the task of controling the targeted use of state funds allocated as part of the government’s anti-crisis program. He pointed out the need to exclude risks, including those connected with the misuse of state allocations. Banks receiving state support have been transferring more funds to foreign banks recently, Putin said, stressing that additional state resources were intended not for speculative operations but for supporting the country’s lending system and boosting its economy.


Sergei Ignatyev explained after the meeting that Putin was referring to certain suspicious operations when the stated purpose of a money transfer did not correspond to the scale of the operation. “In this situation, with capital flight continuing, more effective and tougher control measures are needed, both from the Central Bank and law-enforcement bodies,” Ignatyev said, estimating the net outflow of capital from Russia in October at $50 billion, up from $24.6 billion in September. Finance Minister Alexei Kudrin ascribes half of last month’s capital flight to the reservation of funds for foreign debt payments by Russian banks.


Capital flight peaked in October, according to Nikolai Podguzov, an analyst at Renaissance Capital. “By our estimates, the Central Bank sold about $45 billion in October, which corresponds to the Central Bank’s data. Some of those funds could have been purchased by Russian banks and companies to pay off their foreign debts,” Podguzov said.


The outflow of capital seems to have slowed down in November, judging by the Central Bank’s reduced interventions on the forex market. “In October, the Central Bank’s daily interventions were estimated at between $3 billion and $5 billion, and in November they have dropped to below $1 billion,” he said. Ignatyev said his bank was not going to reintroduce foreign exchange control, noting that “in its traditional form, foreign exchange control is not very effective.”

Analytical department of RIA RosBusinessConsulting

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