Page 67 - RUSRptSept18

The sector liquidity surplus (by, which we mean liquidity that banks keep on interest-bearing deposits with the CBR) was RUB2.7 trillion at end-May, down slightly from RUB2.8 trillion at end-April, although it peaked at RUB3.8 trillion during the month. These deposits are mainly placed by Sberbank and foreign banks, while some other large banks remain reliant on government funding, amounting at end-5M18 to RUB5.6 trillion (excluding Sberbank's RUB0.5 trillion sub-debt from the CBR and RUB1.9bn trillion of CBR deposits in banks under rehabilitation). The largest users of this were VTB group (RUB2.1 trillion,19% of total liabilities), Gazprombank (RUB0.7 trillion, 13%) and Rusag (RUB0.6bn, 19%).
The sector liquidity surplus (by, which we mean liquidity that banks keep on interest-bearing deposits with the CBR) was RUB2.6 trillion at end-June, down slightly from RUB2.7 trillion at end-May, although it evolved to RUB3.3 trillion during the month and peaked at RUB4 trillion in July. These deposits are mainly placed by Sberbank and foreign banks, while some other large banks remain reliant on government funding, amounting to RUB5.8 trillion at end-1H18 (excluding Sberbank's RUB0.5 trillion sub-debt from the CBR and RUB1.9 trillion of CBR deposits in banks under rehabilitation). The largest users of this were VTB group (RUB2.2 trillion, 19% of total liabilities), Gazprombank (RUB0.7 trillion, 13%) and Rusag (RUB0.6 trillion, 19%).
8.1.7 Banks specific issues
Russians will be assigned an individual credit rating in 2019 according to the amendments to the law on credit histories, the Acting Director General of the United Credit Bureau Nikolay Myasnikov said in an interview with Rossiyskaya Gazeta on August 26. Rating scores will be automatically calculated on the basis of various parameters from the credit history: the existence of delinquencies, the level of the debt burden, the number of requests for checking the credit history, the "age" of this history. However, even a high score will not guarantee the issuance of a loan, Myasnikov said. The credit history will start after the application for a loan or a request by a bank to check the borrower in the bureau. Since July 2014, credit institutions are required to transfer information about their clients to at least one credit history bureau even without the consent of the borrower.
CBR tries to reverse rising dollar deposit rates. Starting August 1, the Central Bank of Russia (CBR) will increase foreign currency reserve requirements for banks by 1 percentage point. Banks will now have to pay 7% of foreign currency deposits by citizens to the CBR’s Mandatory Reserve Fund and 8% of FX deposits from non-resident companies. TAKEAWAY: The CBR’s decision continues the de-dollarization policy favoured by Vladimir Putin and Elivra Nabiullina. It should reduce the share of foreign currency in the Russian economy—the bulk of which is dollars—by making it more expensive for banks to attract FX funds. Banks should respond by lowering rates for FX deposits, in turn making ruble rates more attractive. However, Alfa Bank chief economist Natalia Orlova believes these changes will have little effect on the population’s desire to keep wealth (roughly $90bn) in dollar deposits: this preference is determined less by the level of rates, but rather by a fear of another ruble devaluation like the one experienced in late 2014. In recent months, Russian banks have noticeably increased interested rates for dollar deposits. Between May and August, average rates rose from 1.9% to 2.69%. Economists say this phenomenon is due to two factors: rising costs of dollar resources in the international market (due to the US Fed’s decision to hike interest rates), and the lack of foreign currency liquidity in the Russian banking sector (due to a seasonal reduction in the current account surplus). Either way, the recent moves impede the CBR’s de-dollarization strategy. After six of Russia’s top 45 retail banks announced hikes to dollar deposit rates this past week, the CBR decided to take action. Yet while an increase of 1 percentage
67 RUSSIA Country Report September 2018 www.intellinews.com