MOSCOW: Russia’s lower house of parliament hastily approved a draft law that would give the banking sector a capital boost of up to 1 trillion roubles ($16.5bn).
Russia’s financial sector is reeling from the economy’s slide towards recession, a plunge in the value of the rouble, and Western sanctions over the Ukraine crisis, which have restricted banks’ access to international capital markets, sharply raising their funding costs. Finance Minister Anton Siluanov told reporters that banks could start receiving the additional capital early next year, and that the law would mean the budget could slip into a deficit of around 0.8 percent of gross domestic product. “This 1 trillion will make it possible to increase the capital of the banking system by around 13 percent,” he said.
Once the law is approved by the upper house and President Vladimir Putin, it will allow the ministry to issue up to 1 trillion roubles of OFZ treasury bonds, which it will transfer to the Deposit Insurance Agency, a state corporation. The agency would then give the bonds to banks deemed key to the wider economy — which were not specified — in exchange for subordinated debt or preferential shares in the banks. Reuters
