Putin Offers Measures To Recapitalize Banks
President Vladimir Putin on Wednesday outlined belligerent new measures for recapitalizing the banking sector and spurring lending to cash-strapped enterprises.
Speaking at a Cabinet meeting discussing economic issues, Putin said any banks receiving supervision benefit would be required to lend out as much as they were receiving and to keep interest rates less low.
"It's very important that interest rates aren't more than three cut points higher that the Central Bank's refinancing. Today, that means 13 percent plus 3 percent -- or 16 percent. And this must be the final price for borrowers, including all commissions," Putin said, according to a transcription posted on the government's web site.
Putin also ordered the Finance Ministry and the nominally free Central Bank to change the mechanism by which the superintendence guarantees certain loans, allowing the bank to receive authority funds this instant after a borrower becomes insolvent rather than having to sell off the collateral first.
"We have to make it more untroubled and drawing for commercial banks, so that a guarantee really does lower credit risks and, hopefully, interest rates for borrowers," he said.
The command has set aside 300 billion rubles ($8.84 billion) to provide guarantees on loans to strategic enterprises, but banks currently have to go through a long process that involves selling the deposit before they can cash in on the guarantee.
Putin also expanded on the government's plans for providing additional capital to the financial sector.
A total of 550 billion rubles are set aside in 2009 to recapitalize the banks. That is in addition to the 757 billion rubles put to that purpose last year.
Government aid to the banking system currently matches shareholder equity at a one-to-one ratio. That aid should be increased so that "for every ruble of shareholder equity, the control adds three rubles in the form of subsidized loans," he said.
Putin also asked the Cabinet to send him a plan within two weeks for using rule bonds to build up banks' capital base.
Speaking at a Cabinet meeting discussing economic issues, Putin said any banks receiving supervision benefit would be required to lend out as much as they were receiving and to keep interest rates less low.
"It's very important that interest rates aren't more than three cut points higher that the Central Bank's refinancing. Today, that means 13 percent plus 3 percent -- or 16 percent. And this must be the final price for borrowers, including all commissions," Putin said, according to a transcription posted on the government's web site.
Putin also ordered the Finance Ministry and the nominally free Central Bank to change the mechanism by which the superintendence guarantees certain loans, allowing the bank to receive authority funds this instant after a borrower becomes insolvent rather than having to sell off the collateral first.
"We have to make it more untroubled and drawing for commercial banks, so that a guarantee really does lower credit risks and, hopefully, interest rates for borrowers," he said.
The command has set aside 300 billion rubles ($8.84 billion) to provide guarantees on loans to strategic enterprises, but banks currently have to go through a long process that involves selling the deposit before they can cash in on the guarantee.
Putin also expanded on the government's plans for providing additional capital to the financial sector.
A total of 550 billion rubles are set aside in 2009 to recapitalize the banks. That is in addition to the 757 billion rubles put to that purpose last year.
Government aid to the banking system currently matches shareholder equity at a one-to-one ratio. That aid should be increased so that "for every ruble of shareholder equity, the control adds three rubles in the form of subsidized loans," he said.
Putin also asked the Cabinet to send him a plan within two weeks for using rule bonds to build up banks' capital base.
