Scott Bugie, Managing Director in S&P Financial Services Group, said on the air of the Ekho Moskvy radio station on Friday that everyone who wants their deposits back in cash could get them in cash.
Mr Bugie believes the rather high liquidity is largely due to export revenues, above all to oil and gas export revenues.
Mr Bugie admitted instability in the Russian banking sector, which is not the first and apparently not the last instability period in its history. However, he emphasised that it was not a crisis. Russia and the Russian economy's liquidity is rather high today, according to the S&P expert.
Early this week, S&P confirmed its BB+ long-term foreign currency and BBB- long-term local currency ratings for Russia.
The agency also reaffirmed the B short-term foreign currency rating, the A-3 short-term local currency rating, and the ruAA+ rating on the national scale for Russia. S&P also reaffirmed Russia's "stable" rating forecast in a press release.
Ratings are based on the upward liquidity trend and the national debt level, according to S&P expert who was quoted in the press release.
The expert noted that Russia's financial standing would continue improving thanks to high oil prices.
Although sustainable financial indicators in the state sector and foreign liquidity do not compensate for an acute need for the tax and budget, institutional, and administrative reforms, they help the government cope with difficulties and be less vulnerable to situations like current instability in the banking sector or the YUKOS oil major affair's implications on the market (CC/Watch Neg/-), according to the press release.
The agency believes the outflow of deposits from a series of private-owned banks will not cause a profound banking crisis. The S&P experts said the Russian Central Bank had reduced reserve fund deductions from 7% to 3.5% to ensure the country's banking sector liquidity. The withdrawn money will apparently remain in the banking sector but will be re-deposited to state-owned banks whose market share will increase as a result.
Considering Russia's current sovereign credit rating, the banking sector does not make a major nominal liability for the government as it is not very large, although current problems reflect the difficulties facing the banking sector that needs to consolidate whereas private deposit insurance arrangements have not come into force yet, according to the expert.
