Page 20 - bne_March2019_20190306 magazine

20 I Companies & Markets bne March 2019
Analysts say that as part of its clean up of the sector the CBR is becoming less tolerant of Sberbank’s dominance – especially in fintech – and wants to broaden the market, introducing more competition.
The plans for changes to the RPS suggest that the CBR’s plans for Russia’s banking sector are moving into a new phase. The CBR is in the midst of a banking sector clean up that is coming into its end game as the number of banks in Russia fell below 500 in November. The unofficial goal is to reduce the number of banks to around 300 – similar to Germany’s banking system – but the
bne:FX
emphasis has been on closing down dodgy and undercapitalised banks, as well as to stop the widespread stealing. As bne Intel- liNews reported in 2017 “Russia’s great daylight bank robbery,” Russia’s banking sector has been plagued by owners helping themselves to depositors’’ money by making loans to themselves.
The introduction of the RPS seems to be the first volley in
a new direction for the CBR where it is concentrating on increasing the competition between the surviving banks and building a more balanced sector, where traditionally the state-owned banks have been dominant.
Russia’s strong current account supports our ST positive view on RUB
ING in Moscow
Russia's current account surplus of $11.8bn for January is in line with our expectations. This, combined
with a benign external environment, reinforces our constructive short-term view on RUB. However, starting in 2Q19 the Russian currency may face more headwinds
According to preliminary estimates by the Central Bank
of Russia (CBR), the current account surplus in January reached $11.8bn, which is perfectly in line with our $12bn expectations. This surplus was sterilized by the net private
“The net private capital outflow of $10.4bn in January 2019 is higher than the January 2018 amount of $7.0bn”
capital outflow of $10.4bn, which we attribute to the growth in corporate international assets, and the Finance Ministry's FX purchases of $1.9bn.
We see the following implications from those figures:
The current account surplus of $11.8bn for January 2019 is very close to the January 2018 figure of $12.9bn despite
an almost $10/bbl decline in the Urals oil price, which we attribute primarily to the weakening in the imports. After posting 19% y/y growth in 1Q18, it must have contracted in 1Q19. While positive for the balance of payments, we see
www.bne.eu
it as a confirmation of higher dependence of Russia's growth story on net exports – amid weakening consumption and pos- sibly investment trends.
The net private capital outflow of $10.4bn in January 2019 is higher than the January 2018 amount of $7.0bn, which is a cause of concern, as it might reflect lower appetite for capital locally, challenging our $20-30bn full-year forecast of net capital outflow. However, we note that the large capital out- flow and FX purchases exceeded the current account surplus but did not prevent RUB's 6.1% appreciation to $in January, outperforming its peers. This suggests, that the Russian state bond market (OFZ) might have seen foreign portfolio inflows this year after suffering $9bn outflows in April-December 2018. A softening in the US Fed and CBR rhetoric, as well as positive newsflow on Russia's sovereign ratings (including the upgrade from Moody's last week and possible revision from