Rus­sian banks flush with funds

The Pak Banker - - Company& -

MOSCOW: The Rus­sian bank­ing sys­tem is show­ing signs of para­dox; the overnight in­ter­bank lend­ing rates have jumped by 300% com­pared to rates in the be­gin­ning of the year. How­ever, the sys­tem is flush with funds.

Ex­perts have dif­fer­ent views on the sub­ject. Natalie Orlova , Chief Econ­o­mist of Alfa Bank thinks the high in­ter­bank overnight rate of 6% is due to the Cen­tral Bank in­ter­ven­ing. "In pre­vi­ous 2 months we've seen Cen­tral bank ac­tively in­ter­ven­ing on the Ru­ble ex­change rate mar­ket. Ac­cord­ing to the Cen­tral Bank they have sold around 9 bil­lion dol­lars in re­serves, and this def­i­nitely has re­duced avail­able Ru­ble liq­uid­ity", she ob­served. Tak­ing an op­po­site stand, Her­bert Moos, CFO of the VTB bank said that the sys­tem is flush with funds and high rates may be a sea­sonal prob­lem. "I would pri­mar­ily as­so­ci­ate that with Christ­mas and New Year. Banks want to make sure they're prop­erly funded for rel­a­tively long hol­i­day pe­riod in Rus­sia in Jan­uary - that's the main driver. Bank­ing liq­uid­ity is rel­a­tively ro­bust. If any­thing, banks have too much liq­uid­ity", he said, con­tra­dict­ing Orlova. Orlova said that banks have to in­crease in­ter­est rates in fu­ture as in­fla­tion con­tin­ues to rise. She how­ever agrees that liq­uid­ity has been strong over­all through­out the year. "De­posit in­flows are more sen­si­tive to real in­ter­est rates, which are still highly pos­i­tive. De­spite ac­cel­er­at­ing in­fla­tion, real in­ter­est rates are still rel­a­tively high for Rus­sian pop­u­la­tion. -PB News

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