This crisis has sharply risen the profile of public banks while shattering depositor confidence in commercial banks, Mr. Shokhin told a news conference Tuesday. As a result, quite a few depositors have now taken their money out of private banks and put it into public banks, such as Sberbank and Vneshtorgbank, the expert said.
According to Mr. Shokhin, the deposit insurance scheme was introduced in Russia with a view to stepping up competition in the banking sector and enhancing commercial banks' role on the individual savings accounts market. The effect, however, has proved the opposite of what was originally intended, with clients leaving private banks for public ones, which they see as more reliable.
In Mr. Shokhin's view, it may take commercial banks about two years to regain their positions on the market. "There are opportunities for progressive, steady development on the stock market whereas in the banking sector, the role of the psychological factor is far higher, and stability will take more time to restore," he believes.
The no-confidence crisis may also lead to tougher demands for borrowings and borrowers, Mr. Shokhin said. This pattern has now vividly manifested itself in the banking sector, with banks increasingly reluctant to grant loans to one another. The situation may spill over into other economic sectors if banks raise their interest rates and toughen their crediting rules and requirements for borrowers-all in an attempt to shift part of the market risks onto borrowers' shoulders.
But Russian banks cannot raise their interest rates too high, otherwise they will lose in competition with foreign creditors. Foreign creditors may also toughen their requirements for borrowers in today's unstable situation, Mr. Shokhin said. But according to him, more rigid requirements for borrowings and borrowers may even have a positive effect on the economy as a whole.
The dollar-to-ruble rate will remain within the R29-to-30 range in the immediate future, the expert predicted. The Central Bank's rate for Tuesday was R29.13. "The tendency toward a stronger ruble is an objective tendency, which will go on manifesting itself," Mr. Shokhin said at the press conference. He argues that if the Russian economy is oriented toward steady growth, then a stable, robust currency and low inflation are positive factors. The expert acknowledged, however, that the dollar's value on the Russian markets was also on the rise. He put the tendency down to the U.S. currency regaining its positions on international markets and to growing demand. The dollar rate may or may not go below R29, but it is highly unlikely to reach the R30 mark any time soon, the expert concluded.
