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.