Page 9 - bne Magazine Apri20

bne April 2020 The Month That Was I 9
Finance
Eastern Europe
Russian banks could see 20-25% profit decline due to the coronavirus epidemic and low oil prices in 2020.
In 2019 Russian banks made a record- high profit of RUB1.9tn ($257bn),
or RUB1.6tn adjusted for the positive revaluation effects of the IFRS-9 standards introduction in the sector. The rating agency expects the net profit to decline to RUB1.2-1.3tn in 2020.
Russia's Finance Ministry suspended its OFZ federal bond auctions in March until the market situation stabilises, the ministry said in a statement ahead of the weekly auction on March 12. The Finance Ministry has already raised RUB500bn ($7.03bn) in OFZ auctions in the first quarter form a plan to raise RUB600bn.
The Central Bank of Russia (CBR) stepped into the foreign exchange markets to support the ruble in mid- March as the ruble fell to four year
lows of over RUB80 to the dollar. The CBR announced that it was suspending so-called budget rule that sterilizes all oil revenues over $42 for the next 30 days that gives the bank access to more dollars.
Ukraine has effectively been shut out of the international capital markets after the yield on Ukraine's 2028 dollar denominated Eurobonds surged 147bps to 10.91% on March 12. Investors
are unhappy with a comprehensive government reshuffle even before the current crisis made things worse. US investment bank Morgan Stanley advised investors to “sell Ukrainian Eurobonds and buy Egypt.”
The Belarusian Finance Ministry cancelled a planned new Eurobond placement because “the market
has gone crazy,” said the Ministry of Finance. Russia has been holding up
$600mn loan which has put Belarus’ finances under pressure as part of the two country’s row over oil supplies.
Central Europe
The European Bank for Reconstruction and Development (EBRD) has unveiled an emergency €1bn “Solidarity Package” of measures to help companies in its regions deal with the impact of the coronavirus pandemic, the bank said in its March 13 press release.
Southeast Europe
Romania’s central bank, the BNR decided at an emergency meeting on March 20 to cut the monetary policy interest rate by 0.5pp to 2.0% and narrow the interest rates corridor from 1pp to 0.5pp, therefore lowering the Lombard interest rate by a full percentage point to 2.5%. The BNR also pledged to purchase government securities on the secondary market.
Serbia's central bank said on March 24 it has bought RSD14.9bn (€127mn) from commercial banks at an additional three-month foreign currency swap auction. The additional FX swap auction aims to back the domestic financial system and overall economic flows as Serbia has declared a state of emergency amid the spread of coronavirus.
The Croatian National Bank (HNB) cut mandatory reserve requirements for banks from 12% to 9% on March 23, the bank said in a statement. The cut came amid fears about the damage to the economy being caused by the coronavirus (COVID-19) pandemic
and measures to contain it.
Eurasia
Turkey’s state-run Vakifbank is to buy back shares to protect the value of shareholder investments and support price stability, news site Diken said on March 18.
Iran on March 12 went to the International Monetary Fund (IMF) to request assistance for the first time since the 1960s and cancelled all Persian new year Nowruz events as the coronavirus pandemic continued to take a terrible toll on the country.
The Central Bank of Iran (CBI) has ordered all commercial banks to offer a three-month repayment grace period on loans to counter financial difficulties caused to people by the coronavirus pandemic. Iranian businesses are losing millions of dollars a day due to the collapse of footfall in the country.
State-owned companies in Kazakhstan were on March 23 ordered to start selling part of
their foreign currency revenue on
the domestic market to support the embattled national currency. The Kazakh national currency, the tenge, hit a new low after it fell 3.9% in early trade on March 19 to KZT460 against the dollar on the interbank market.
President Shavkat Mirziyoyev ordered Uzbekistan’s government on March 19 to borrow up to $1bn abroad to assist with financing measures to be undertaken against the spread of the coronavirus (COVID-19) and its impact on the Uzbek economy. Uzbekistan could lose around $1.1bn from expected export revenue in 2019 due to the global economic slowdown.
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