First deputy chairman of the Central Bank of Russia Alexey Ulyukaev
Photo: Dmitry Azarov
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Central Bank Expands Its Lombard List
The Central Bank of Russia has doubled the number of issuers whose stock can be used as collateral on loans to banks as another step to counter the liquidity crisis. This will significantly increase the number of banks that will be able to borrow directly from the Central Bank. The list now includes 59 issuers and the number of financial organizations among them increased from 7 to 25.
Since August, the Central Bank has been making direct repo loans to banks of 120-240 billion rubles per day. That sum may increase to 300-400 billion rubles by next month.
The minimum credit rating demanded by the Bank has been lowered by two steps. Thus the Central Bank has increased its risks. Analysts say that the chances of a default remain small, but a suddenly fall in the value of a stock is always possible. Russian Standard Bank stock, for exaple, fell to 5-6 percent below face value in August, and URSA Bank stock fell to 3-4 percent below face value at the same time.
To protect itself, the Central Bank accepts stock from Lombard-list issuers at a discount of 9 percent for one-day operations, up to 13 percent for two-week operations and up to 15 percent for six-month operations. It is possible that the discount on the new entries to the list will be higher.
www.kommersant.com
All the Article in Russian as of Oct. 08, 2007
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