CBR CEO German Gref will distribute the budget money in the banking system.
Photo: Vasily Shaposhnikov
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The Undistributed Promise
Russia’s three biggest banks - Sberbank, VTB and Gazprombank – will get 1.5 trillion ruble from the RF Finance Ministry at today’s special auction. The funds will go to sustain banking system of the country. The record efforts of authorities aimed at improving liquidity fueled the stock exchanges Friday, reduced the banking demand for the CBR money and lowered the rates of interbank crediting. On the other hand, the budget injections through three biggest banks will be hardly extremely efficient. The reason is poor operation of the interbank redistribution procedures.
The authorities and top bankers spent Friday reporting about success of liquidity support. Finance Minister Alexei Kudrin said the amount of 60 billion ruble that he had given to three biggest banks for the MICEX payments yielded the first results. “MICEX works today,” Kudrin emphasized.
Sberbank CEO German Gref spoke of liquidity improvement thanks to opening the fund of mandatory reserves to the banks. The money released from the fund as a result of reduction in deduction standards reached the banks late Thursday. The liquidity stepped up by roughly 350 billion ruble after it.
The amount sufficed to curtail liquidity demand at the repo auctions of the CBR. The banks raised just 165.6 billion ruble via two auctions on Friday vs. 225.3 billion ruble Thursday and above 360 billion ruble Wednesday. Overall, some 420 billion ruble of budget money has been kept at the bank deposits, according to Kudrin.
The success will be even greater today, when Sberbank, VTB and Gazprombank get 1.5 billion ruble for three months via the special auction. In return, the giants have pledged to spend money for crediting small and mid-size banks. What’s more, Finance Ministry will offer another 900 billion ruble via the auctions this week. Finance Ministry announced yesterday that not only Sberbank, VTB, Gazprombank but 25 banks more may take part at today’s auction for 600 billion ruble of the budget money to be given for three months at 8.75 percent on year.
The tricky point is that the authorities step up the minimal bid from 200 million ruble to 63.5 billion ruble from September 23, actually restricting the number of budget auction players to three biggest banks.
Another difficulty is poor operation of the interbank redistribution procedures. “The Bank of Russia provides liquidity to small and mid banks via big credit institutions. As a result, the former completely depend on the trust and the will of the latter, and the window is slammed immediately when the credibility crisis begins,” said Evgeny Nadorshin from Trust Bank.
www.kommersant.com
All the Article in Russian as of Sep. 22, 2008
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