17 June 2004 00:09
CHOPPY TIMES FOR RUSSIAN BANKS - FITCH
LONDON/MOSCOW. June 15 (Interfax) - Fitch Ratings says the turbulence in the Russian interbank markets over the past
week, provided it does not escalate, is not, in itself, expected to materially affect Russia's leading banks.
Overnight rates rose sharply last week, triggered by the Central Bank of Russia's withdrawal of
Sodbusinessbank's license in mid-May, the subsequent failure and default of Commercial Bank Credittrust and the
Russian rumor mill going into overdrive.
Even so, Fitch is increasingly of the opinion that the Russian
authorities would like to see a further culling of the some of the
country's smallest banks, which have little value for the Russian
In a Comment issued today entitled "Russian Banks: Choppy Times, But Should be Containable for the
Country's Leading Banks," Fitch says the sharp reduction in interbank liquidity and increase in overnight
rates, barring any escalation, are more likely to hurt the country's very many small banks than its larger ones.
Russia's largest banks tend to be net depositors rather than net borrowers on the interbank market, and most are
understood to have closed their lines to small banks.
Fitch says that the reaction of the banking sector to the events that started with the withdrawal of
Sodbusinessbank's license produced an unexpected strain on liquidity in parts of the system. Therefore, recent
promises of additional liquidity for the banking sector by the CBR, are positive from a support point of view.
economy. At end-2003, Russia's smallest 1,100 banks accounted for only c.11% of banking sector assets. Critical
will be how this is effected by the CBR in the run-up to the introduction of Deposit Insurance, without aggravating what
should be an eminently containable situation.
Fitch believes a larger threat to most of the larger banks in Russia than the current situation on the interbank
market would be a wider loss of depositor confidence. There is presently no sign of this, but it is something to which
privately owned Russian banks remain potentially vulnerable.
[Interfax] |
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