Actions by government and the task of minimization of consequences of the financial crisis have very little in common. First, we need to define what the financial crisis is like in Russia. If we talk of fall of the stock exchange indices, that affects several hundreds banks and about two hundred thousands people. Me personally, I belong to that number. However, in the balance of NRK/NRB the shares of the blue chips come up only to 10% of the general number. We have sold the major part of portfolio in 2006 (RAO EES, Gazprom etc.) and invested money into the real sector (air transportation and leasing, agriculture, development of our bank’s affiliated chain, affordable low-rise housing and so forth). So the fall of the stock indices is no fatal in case there are no big debts.
And what if there are big debts? Then it’s serious. Such sectors as banking retail, construction and real estate, air transportation, tour operators have taken large credits. This problem is most real. No one lends money any more. Even now the process is going on of bankruptcy of many banks and companies - from the sectors mentioned –that are not able to pay to their creditors.
The government looks on the debts by the state corporations as on their own debts. As for businesses grown up from the lien auctions, among the political elite there are advocates of the idea of returning the state control over those businesses. The crisis is the best instrument for that. The government refinances the debts of those companies to the foreign creditors and after some while it becomes the holder of the controlling interest. In such a case there is no necessity to pay much, like it was about Sibneft, or to make someone bankrupt, like it was with YUKOS. Significantly, that thing itself would not change dramatically the situation in the Russian economy, as the state sector share is already rather high. And the rating will be fantastic – over 100%!
If the banking system gets reorganized and consolidated ably now, it would be better. Money laundering offices take rather big share among the existing 1,200 banks. With normal banks, the savings of people are guaranteed with the system of insurance of deposits. And now this limit is increased up to 700,000 rubles. Obviously helpless and useless banks will die, while others will be taken over by larger players. Small but steady regional banks will go through this crisis; I hope it will be done with support from the Central Bank. This is why the government and the Central Bank just need to maintain the necessary level of liquidity in the inter-bank market.
Enormous money is allotted to the state-belonging banks. The market gets no use out of that, as this money does not leave those banks. The daughters of foreign banks get short-term credits for their “mothers” in Europe. This makes the outflow of capital increased. Well, at least there is no direct loss, of course, unless some of “mothers” go bankrupt.
As for the story of salvation of KIT Finance and Svyazbank (to put it exactly, these are two different stories), that’s very simple. Svyazbank was better to deal with inspectors, not with pouring of money by the state. And they were to check the period before appointment of A.Aleshkina. KIT Finance at least has a portfolio of mortgage credits. However, no one else is allowed pledging it. And why the Russian Railroad Agency needs this bank? Well, I would not argue with the fact that this bank is from top 100 and it is probably useful saving it. But whose bank is it and whose money is there in it? And please, no more selective saving of private banks! Let everyone have equal terms of saving.
The story of credit given to Iceland is something special. This country is a big offshore, where financial sector takes half of the national economy. Its foreign debt is equal to 5 GDPs. There are three versions. The first one deals with political PR (not very smart, though). The second is that someone’s private money got endangered in the offshore, and it must be saved. I would not like to think it’s true. The last variant is that some state company has pledged a big package of shares, and now it may be lost; so it has to be saved.
It’s interesting to know whether the Moscow government will give the promised 2 billion of dollars to the builders. About one fifth of return of the capital’s budget is based on the lending, and now it’s getting more and more difficult to get refinancing. Return out from the building sector constitutes a significant part in the budget’s profit. And now this branch is in crisis. So in the near future the Moscow government will have to think of its own problems, and not of those by the builders.