Russia has moved to support a number of large
companies and banks as it tries to prop up a struggling economy and a banking
sector battered by the rouble's jitters.
On Wednesday, December 31, the government said it
would support Yamal LNG, the Arctic gas project of Novatek, with Rbs150bn.
Separately Gazprombank, the country's third largest lender, said the government
had bought Rbs39.95bn in preferred shares, using money from a subordinated deposit
the bank had returned to the National Wealth Fund. "The conversion allows the bank to
strengthen its capital structure and provides for sufficient scope to expand
its operations," the lender said.
The support follows a Rbs100bn capital injection from
the NWF into state-owned VTB, the second-largest bank, this week. VTB said it
expected to receive a further Rbs150bn in the first quarter of 2015, while
Gazprombank has asked for a further Rbs30bn. Russia's international reserves
have fallen to $388.5bn, down from $509.6bn a year ago, the central bank said
on Wednesday, while the state statistics agency Rosstat said inflation for the
year had hit 11.4 per cent
Moscow is stepping up financial support for companies
as the economy is being driven into recession by a toxic mix of sanctions
(blocking many Russian borrowers from western capital markets), sliding oil
prices and a dramatic devaluation of the rouble - which is also threatening the
stability of the banking system. The rouble has depreciated more than 40 per
cent since the beginning of the year. Foreign currency loans coming up for
repayment have become more expensive - a bigger problem for banks because they
lack the foreign currency revenues of resource exporters. Savers, spooked by
the rouble's collapse on December 16, have withdrawn large amounts of deposits,
weakening banks' capital base. On the last trading day ahead of the new year
holiday, the rouble resumed its slide, dropping to 60.4 against the dollar, its
lowest valuation since December 19. Meanwhile, the government tripled funds
committed to the rescue of Trust Bank, a midsized lender that foundered after
the rouble's collapse, to Rbs127bn. Under legislation passed this month, Moscow
will prop up the banking sector with Rbs1,000bn next year through OFZ federal
loan bonds.
Standard & Poor's this week put the long-term
ratings of 13 Russian financial institutions - including Gazprombank - on
negative credit watch, a week after saying it was considering a downgrade of
the sovereign rating to junk status in January. GDP growth was 0.5 per cent
lower in November than the same month last year, the first such contraction
since October 2009. Anton Siluanov, finance minister, has forecast that GDP
will fall 4 per cent next year, while the central bank forecasts a 4.5 per cent
contraction.