Page 78 - RUSRptApr17

controlled by the Russian Orthodox Church, the holding announced. Peresvet, one of the top 50 Russian banks, has been under the control of the Central Bank of Russia (CBR) since the end of November 2016. The bank reportedly held deposits of major state-controlled corporations and Kremlin-affiliated VIPs, including RUB18.7bn in deposits from InterRAO. Now the energy holding agreed to bail the bank in, but under the condition that it will pass under control of Vserosiysky Bank Razvitya Regionov (VBRR, Pan-Russian Bank of Regional Development), a subsidiary of Russia's largest crude oil producer Rosneft.
The Uralsib name in London has gone up in a puff of smoke after the Russian lender sold its subsidiary for an undisclosed sum to an emerging markets brokerage firm. bne IntelliNews had reported exclusively i n October last year that the parent lender had put its London business up for sale, effectively uprooting the mysticism-laden legacy of its ex-billionaire founder Nikolai Tsvetkov.
8.2 Central Bank policy rate
Russia’s Central Bank surprised analysts with a deeper than expected rate cut on April 28, slashing the monetary policy rate by 50bp, despite an uptick inflation week on week going into the meeting. Ony six of 42 analysts surveyed had expected the result, although a cut of 25bp was widely expected.
Russia’s central bank signaled it will frontload interest-rate cuts after inflation slowed to very close to its 4% target.
CBR appears to be targeting a 25 bp rate cut for June 16.
But the Bank of Russia said its “assessment of the overall potential” for easing this year is unchanged.
At the previous meeting in March, policymakers cut the benchmark by a quarter-percentage point after a six-month pause.
“Inflation is moving towards the target, inflation expectations are still declining and economic activity is recovering,” the central bank said. “Given the moderately tight monetary policy, the 4 percent inflation target will be achieved before the end of 2017 and will be maintained close to this level in 2018-2019.”
The Bank of Russia is responding to pressure to lower rates and blunt the ruble’s appeal as a carry trade, when investors borrow in countries where rates are lower and then invest the money where the returns are higher. The currency’s gains have eroded budget revenue from dollar-denominated energy exports, with Putin saying this week the government is searching for “market-based measures” to affect the exchange rate after faltering attempts by officials to talk it down.
The CBR also sees the scope for its key rate reduction in the second quarter of this year if positive economic trends persist, the regulator’s Chief Elvira Nabiullina said on April 20.
"On the whole the current economic situation inspires hope. We see the scope for further reduction of the key rate in the second quarter if the
78 RUSSIA Country Report April 2017 www.intellinews.com