Russia's Central Bank has tools to shield banks from US sanctions

The Central Bank of Russia (CBR) has enough tools to ensure that Russian banks’ liquidity is sustainable against new US sanctions, under which Gazprombank and Vnesheconombank are prohibited from getting long-term US loans, Central Bank Deputy Chairman Mikhail Sukhov said on Thursday.
“We have enough tools to work with banks to make the liquidity of credit institutions sustainable. I do not see any probability of a situation where the liquidity of these organizations plummets. The central bank has enough instruments at its disposal to cope with this situation.” Sukhov told reporters the sidelines of a Saint-Petersburg International Banking Conference.
Sukhov also said that 30 largest banks’ capital adequacy will not be affected if they incur losses of up to 1 trillion rubles ($28.5 billion).

“Although the capital adequacy level is comfortable, a little bit less than 13%, if we try to proportionate capital reserves, which banks have to the potential risks and losses, the reserves will seem not so big,” he said.
“The difference between the current capital adequacy and the capital which banks would have in case of losses stands at about 1 trillion rubles. This means that the capital of 30 largest banks can stand losses of about 1 trillion rubles without breaching the capital adequacy rules.”
The central bank will draw up a list of systemically important banks, which would be the prime target for central bank help in case of troubles, in July-December, Sukhov said.
Households’ deposits will grow 10-12% in 2014, Sukhov said. “I know that the Deposit Insurance Agency reduced the forecast to 7-9%. I would be more optimistic and I would say that the realistic figure is closer to 10-12%.”
The central bank is considering allowing floating deposit rates to help banks assess their risks better, he said.
Russia’s 66 banks out of nearly 1,000 are exceeding the 20% limit of crediting their beneficiaries, which will be introduced next year, Sukhov said separately.
“To date, 66 of the country’s banks, not taking into account affiliates of foreign credit organizations, exceed the 20% limit on granting loans to their owners, which will be imposed next year,” Sukhov said.
Sukhov said that 16 banks out of 66 have capital of over 5 billion rubles.
The growth of retail loans amounted to 20% annually in June, which Sukhov called acceptable. Soured loans accounted for 3.3% of credits granted by five largest banks and to about 6.6% with the rest of the banks, he said.