Russia’s Banks Urged to Return
Russian banks would better re-direct to domestic market to narrow too big share of foreign currency in their liabilities, CBR First Deputy Chairman Gennady Melikyan said, expressing the concern of the Central Bank of Russia about huge amount borrowed by the banks overseas. The analysts say the banks will go back to the country, not through force of CBR, but rather because of the growing cost of foreign loans.
In the bank system, the level of foreign loans averages 15 percent of bank liabilities, CBR First Deputy Chairman Gennady Melikyan said in Nizhni Novgorod yesterday. The official suggested the banks “think how to place loans domestically, including, perhaps, through the help of development institutions.”
According to CBR, foreign liabilities of Russia’s credit institutions to non-residents totaled $110 billion as of April 1, 2007. The amount grew nearly two fold, from $57.2 billion, during a year.
The alarming growth in foreign debts of the companies has been talked over for long. Earlier, they focused on government’s companies, now they are speaking about the banks, Trust analyst Marina Vlasenko reminded. She said today’s level of foreign debt of the bank sector is above the overall capacity of the country’s market of ruble bonds and domestic market hasn’t got accustomed to big banks’ appetite. “Availability of global capital market to Russia’s banks is necessary and inevitable,” the analyst concluded.
So far, however, neither Finance Ministry nor CBR intend to take any definite actions to sort out the problems of huge debts denominated in foreign exchange. A source with Finance Ministry said they share the concern of CBR, but “the government doesn’t intend to introduce or agree with CBR on any restrictions on foreign loans.” But the analysts predict some slowdown even without the ban of the government. Higher cost of foreign debts will suffice for this purpose.
www.kommersant.com
All the Article in Russian as of Aug. 24, 2007
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