«Expert Online»The 116 Chosen Ones
As government’s plan to overcome liquidity crisis in Russia, banks are receiving unsecured loans, but not all of the banks. Experts doubt that the money will spread to the whole banking system and fear that the “chosen ones” will use the funds to pursue their own purposes
Photo: ITAR-TASS
The first auction of unsecured loans for Russia’s banks was held today. In the situation of serious liquidity shortages, the banks borrowed just slightly more than half of the 700 bn. rubles (roughly $ 27 bn.). Average interest rate on the five-week loans is 9.89 percent.
But why, one might ask, did the banks, suffering from liquidity crisis, take so little? The answer is simple – not all of them where invited, only 116 B or B3 or higher rated banks (which is less then 10 % of all banks) could take part in the auction.
“The situation is very interesting – crediting conditions are very favorable, but participation is restricted”, said Alexander Baranov of Nord-Capital company.
A top manager with one of Russia’s banks told Expert online the authorities were simply not able to provide loans to every bank, and could not think of a better criteria to chose those favored than their international rating. But there is a vicious circle – banks that have the most serious liquidity problems are not top-rated, and thus are not given loans. Another analysts said that in the face of current crisis, rating agencies often underrate banks.
Besides, not all banks of those invited decided to borrow. Many of them where surprised to see state-owned and BB rated banks, who have access to cheaper credit auctions, among participants. Oleg Tyazhelnikov, a top-manager with Investtorgbank, estimates about 70 banks participated.
But still, many bankers and analysts are happy with the auction: “the money will go to the banking system, spread between banks and will cover previously suspended payments, bringing relief to the real sector, a representative of a bank told Expert Online. A help scheme has been created, and it is at least better then the previous one, where private banks could not count on any loans”.
Inter-bank market reacted to the news positively: interest rates dropped from nearly 20 to 10 – 12 percent, said Dmitry Popkov of Petrokommerz bank.
But it is to early to celebrate, Baranov thinks. The banks and their clients will now have to pay taxes, which will drive most of the liquidity back from them, and the money will not get into the market.
In a long-term perspective, it is important to see how the loans will be used. Experts of Raiffeisenbank fear the money can be spent of currencies, like it happened to the help funds the state offered earlier. It is said that Central Bank has called banks not to weaken the ruble. But such pressure is inefficient when individual clients of the banks panic and buy vast amounts of dollars and euros.
