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June 6 citing unnamed sources close to the deal and an unnamed central bank official. Reportedly, the deal is likely to be announced in June, although a number of legal and financial issues is still not resolved. Following the Central Bank of Russia (CBR) taking over Promsvyazbank (PSB) in 2017, a much anticipated merger between PSB and Vozrozhdenie was cancelled, and the CBR setting a June 6 deadline for Ananyevs to bring their controlling stakes in Vozrozhdenie to below 10% .
VTB Bank is negotiating a joint venture with Chinese e-commerce major Alibaba , Vedomosti d aily said on June 19 citing unnamed sources close to the deal. Reportedly, VTB wants to create a digital platform and catch up with sister state-owned bank Sberbank, which dominates the sector and is way ahead with its digitally-driven strategy . "VTB has strong logistics (controls the Post of Russia), off-line branch chain, financial competencies, and cooperation with Alibaba would fill in the missing know-how gaps," the sources told the daily. In turn, a JV with Russia's major bank would help Alibaba to potentially dodge the levy on cross-border commerce which is reportedly being prepared by the government to boost domestic competitiveness on largely foreign and Chinese dominated e-commerce market .
8.2 Central Bank policy rate
The Central Bank of Russia (CBR) kept key interest rate unchanged at 7.25% at a monetary policy meeting on June 15, citing this week's government's decision to hike the VAT rate to 20% as the main reason for postponing more monetary easing.
The determination with which the government prepares to finance the spending drive announced by the President Vladimir Putin under latest May Decree has alarmed the inflation-orientated regulator and made the CBR more reluctant to cut the interest rates fast.
Analysts were largely uncertain on which way the central bank would jump until the very last moment, but some argued it could have still opted for a minimal 25bp rate cut as inflation remains a historic lows. Currently the consumer price inflation (CPI) rate is 2.4% -- still well below the CBR’s 4% target rate for the year.
At the beginning of 2018 the CBR was steadily cutting rates as part of a moderate monetary easing policy thanks to inflation’s fall to a post-Soviet record low. But since a new US Treasury Department round of sanctions on April 6 upset these plans analysts are scratching their heads trying to figure out the central bank's next move.
Now the CBR sees the VAT hike as a direct threat to inflation stability, expected to take effect in 2018 and carry through to 2019.
In the statement accompanying the Hold rate decision, the central bank increased its inflation outlook to 3.5-4% for 2018, warning of a temporary hike to 4-4.5% in 2019. The regulator has now postponed the target of reaching inflation of 4% to 2020.
The Finance Ministry did not expect the VAT hike decision to influence the
RUSSIA Country Report July 2018 www.intellinews.com