Page 75 - RusRPTMay20

received for the payment of wages.
The Russian government has issued a decree setting out the parameters of the subsidised mortgage programme. ​The subsidy is to cover the difference between the key rate increased by 3% and 6.5% in the credit agreement, for mortgages issued from April 17 to November 1, with a 20% down-payment, and for flat purchases of up to RUB8mn in the Moscow and St Petersburg metropolitan areas or RUB3mn in other regions.
On 16 April, President Vladimir Putin held a meeting with the key players from the construction segment and announced state support initiatives.
We see the main implications for commercial homebuilders being in the area of subsidised mortgage rates for clients and corporate loans. The decree stated RUB740bn as the maximum amount of mortgages for, which rates could be subsidised. That is equivalent to 26% of last year’s origination, with annual new mortgages applicable for interest compensation of up to RUB18.5bn at the current key rate of 6%.
According to DOM.RF, average prices in 2019-1Q20 would mean that 53% of transactions in Moscow, 90% in St Petersburg, and 70% in other regions would pass the aforementioned thresholds.
The government is to develop the programme parameters by April 30 to subsidise bank loans for developers that retain their employees and stick to the commissioning plans for 2020-21.
The programme was stated at RUB12bn. Were it to cover interest, and subject to the rate thresholds, that could also represent a sizable support mechanism.
As of YE19, the loan portfolio to the development sector was RUB1.3 trillion. Other support initiatives include a RUB50bn state guarantee for DOM.RF to acquire loans to purchase flats and a RUB30bn capital injection to the fund of deceived clients, that we see as having a limited impact on the broader commercial segment.
CBR announced additional supportive measures for banks​ on April 6. One proposal – to abolish higher RWs for mortgages with 15-20% down payment, issued before 1 April – could save up to Rb110bn in capital. Separately, the CBR said banks had no liquidity issues and the CBR can act accordingly with L-T REPO. Any potential key rate cut would also support banks’ NIMs.
The volume of repo transactions by Russian banks soared in the first week of March after Russia withdrew from the OPEC+ production cut deal to levels last seen in the near-miss banking crisis of September 2017, but quickly recovered. ​If banks are short of cash they can borrow short-term from the Central Bank of Russia (CBR) by trading their assets, like the OFZ treasury bonds, for cash. Normally a liquidity management tool, in times of crisis banks use the repo mechanism to raise money quickly. The last time repos soared was in the autumn of 2017 when the CBR took over a string of top commercial banks.​ ​The so-called Garden Ring banks went bust in the autumn of 2017 and had to be rescued by the CBR​. At the time the instability caused by closing down several of biggest commercial banks nearly
75​ RUSSIA Country Report​ May 2020 ​ ​www.intellinews.com