1. Russia addresses liquidity crunch with pension fund loans

    MOSCOW Oct 14 (Reuters) - The Russian Finance Ministry will try to help banks struggling with a liquidity crunch by allowing them access loans from the state pension fund, the Ministry said on Friday.A draft document on pension fund regulation, published on the Finance Ministry’s web site, showed that banks will have access to up to 90 billion roubles ($2.88 billion) every three months from social security funds, part of the overall pension fund.”It will be short-term deposits. The maximum duration will likely not exceed six months,” Andrei Vorontsov, deputy director of financial policy department at the finance ministry, told Reuters.The National Welfare Fund, intended to support the pension system and not to exceed 10 percent of annual gross domestic product (GDP), stood at 2.827 trillion roubles as of Oct. 1.The amendment to legislation comes amid liquidity strains in the money market, forcing banks to sell foreign currencies for roubles or use the central bank repo facility to prop up accounts.Pension fund loans will be accessible for banks with capital of not below 5 billion rouble, and with credit ratings of not lower than “BB-” on Fitch and S&P scale or not worse then “Ba3” on Moody’s scale.The new refinancing tool, however, will hardly be sufficient to meet all banks’ needs in case of urgency.”Obviously, this amount of money supply won’t be able to play a crucial role for liquidity levels but it will be an important alternative source of funding,” said Ekaterina Sidorova, an analyst with Troika Dialog.In the week to Oct. 14 the overall amount of daily repo auction with the central bank has totalled nearly 1.56 trillion roubles, pointing at highest demand for liquidity since the crisis of 2008-2009.The Finance Ministry also injects money into the system by carrying out deposit actions where it places temporarily free budget funds at banks’ accounts. ($1 = 31.252 Russian Roubles)


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