Russian Central Bank Extends Loan Terms To Help Banks

Russia’s central bank said on Friday it would extend the term of loans guaranteed by non-marketable assets or by gold by six months to give banks more flexibility to manage liquidity.

The central bank has been steadily easing the terms on which it provides long-term refinancing to banks, as banks complain of tight liquidity conditions and a lack of long-term funding.

Liquidity in the banking sector has been squeezed this year due to a combination of risk aversion towards emerging markets and by investor concerns over Moscow’s foreign policy towards Ukraine.

The central bank said it would extend the length of loans guaranteed by non-marketable assets, gold or by guarantees to 18 months from 12 months, effective as of June 30. Interest rates on the loans will also be linked to the central bank’s benchmark rate instead of being fixed, it said.

Non-marketable assets and guarantees most commonly refer to banks’ credit claims on their clients, a less liquid form of collateral than securities, which banks use to secure short-term repo refinancing.

The central bank, in a statement, said that new loans of 549 days will for now carry the same interest rates as the loans previously extended up to 365 days, which is 9.25 percent for loans secured by non-marketable assets or guarantees and 9 percent for gold-backed loans.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza