Russia’s banks are in trouble. They have been plagued by more and more overdue loans. The Russian economy is shrinking for the first time in about 10 years. Over the last 12 months, around 30 banks have lost their licenses.
Reuters reported, “Alexander Turbanov, who heads the agency charged by the state with bailing out troubled banks, told a banking conference that his agency would likely take control of another 15-20 banks this year, in addition to those set to lose their licenses.”
Russian banks have been consolidating their reserves. But, reserves rules, which have been lowered of late, are set to snap back early in 2010. The central bank demonstrated that banks might need to move 500 billion rubles into extra provisions by that 2010 deadline, according to Reuters.
It is possible that regulators will extend the deadline.
In attempting to adjust for Russia’s first recession since 1998, the central bank has cut interest rates four times since April. Bloomberg reported, “Bank Rossii cut the refinancing rate to 11 percent from 11.5 percent and the repurchase rate charged on central bank loans to 10 percent from 10.5 percent effective July 13.”
The Moscow Times reported that banks need to be assured that there will soon be stability in Russia’s economy.
Nikolai Podlevskikh, head of the analytical department at Zerich Capital Management, told The Moscow Times, “Despite government measures, the economy is still suffering from monetary hunger, as money is being disbursed in slow mode and banks continue consolidating their reserves.”
However, there is some soothing news for the troubled banks. Russia’s finance minister, Alexei Kudrin, who typically lacks optimism, said in The Moscow Times the economy might grow slightly next year. “We expect — in a conservative, very cautious scenario — economic growth of about 1 percent in 2010.”
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