YEREVAN, July 26. /ARKA/. Structural changes in the balance sheets of Russian banks since the 2008 crisis have strengthened the financial sector against any external shocks, Sergei Ignatiev, head of Russia’s Central bank, said in an interview with the Financial Times, banki.ru reports.
‘The remarks by Sergei Ignatiev appeared aimed at calming investor fears that a serious crisis in the eurozone would have a catastrophic effect on Russia – as it did in the autumn of 2008 and spring of 2009, when the ruble was devalued by a third and the banking system was placed under severe stress for the better part of a year.
“In this respect, things are in a much better state,” Mr Ignatiev said, pointing out that in August 2008, on the eve of the last crisis, net foreign assets of the entire Russian banking system stood at negative $100bn, while today this figure – total foreign assets minus total foreign liabilities – is positive $44bn. Total foreign liabilities have shrunk from $208bn in August 2008 to $176bn today.
When banks owe more in foreign currency than they are owed, they are particularly vulnerable to a devaluation of their home currency. The risks that such a structural imbalance impose are greater when a country allows its currency to float freely, as Russia has recently done.
What does worry the central banker is the large outflow of capital from Russia in 2011 and this year. Mr Ignatiev said that Russian and foreign bank subsidiaries in Russia were responsible for $23bn of the $80bn outflow in 2011.
“It’s a lot, because Russia is not yet a developed country, and there is such an idea that we should attract capital, because the returns are higher than in developed countries,” said Mr Ignatiev. “I think it’s a bit of an abnormal situation for there to be such an outflow of capital from a country with such potential.”
Mr Ignatiev added that Cyprus was the only crisis-hit eurozone country that Russian banks had exposure to. -0-
