The erupting global liquidity crisis and the drain of retail deposits could badly affect the banking system as a whole. Some bankers are already predicting that Russia will face a domestic liquidity crisis in the near future. But even if this does not come true, it may take banks and their customers quite a while to return to past stability. The growth of credit institutions will slow down, while loans will be more expensive
Russian banks may very soon face liquidity problems. The crisis in the West is growing. It was reported today that Bear Stearns, America's fifth biggest investment bank, is on the brink of bankruptcy. Rival J.P.Morgan Chase later announced its immediate purchase of Bear Stearns for only $2. (Last Friday, the bank's shares where quoted on NYSE at $30; a year ago they were at $150). Last week, Carlyle Capital, part of Carlyle Group, announced a default of $16.6 bln. in debt obligations. Analyst Mark Rubinshtein says another major bank, Lehman Brothers, will be the next to be hit by the crisis.
Russian banks are also experiencing problems. In January, customers withdrew almost $ 1.45 bln, or 0.6% of all retail deposits. The last time such a drain was registered was during the 'crisis of trust' in 2004. Bankers have begun to raise interest rates in order to stop this dangerous trend.
Experts and bankers differ in their opinions on these two trends and how they may influence Russian banking.
There are optimists who think Russian banks will only benefit from the crisis in the West.
“Our banks will be given money with greater pleasure than before,” Rubinshtein believes. “They have high quality assets and their growth dynamics are high. These two factors make our banks very attractive borrowers.”
Other experts are more pessimistic though.
“The Bear Stearns story proves that the crisis is growing and that the forms it is taking are getting worse,” Anna Belenkaya, a financial analyst from Sovlink, believes. “This means that it will be increasingly hard for Russian banks to refinance loans and take out new ones.”
Vladimir Lutsenko, vice-chairman of SDM Bank, agrees. “March and April are peak months for international loan payments (Russian banks will have to pay a total of 28 bln. dollars in 2008), and therefore we can expect a local liquidity crisis, similar to that of 2004.”
And there are many reasons for such expectations: seasonal factors, inflation, and the panic effect. Vladimir Mekhryakov of Khanty-Mansi Bank mentioned two more reasons: the fear of denomination and the cutting of discounts on loans for banks’ customers.
Belenkaya thinks there is a chance to hold the crisis back. She believes that the Finance Ministry and the Central Bank have all the resources to do so.
Yekaterina Shokhina
http://eng.expert.ru
