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Russian banks 'have no need of further financial state support'

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Russian Central Bank  - Sputnik International
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The Russian Central Bank believes that the country's banks do not need any further financial state support, a business daily said on Friday, citing a Bank of Russia official.

The Russian Central Bank believes that the country's banks do not need any further financial state support, a business daily said on Friday, citing a Bank of Russia official.

Russia, which receives a large part of its revenue from oil exports, was hit hard by the global financial crisis, prompting the government to take urgent measures to save the banking sector from collapse, extending direct and subordinated loans to major banks, most of them held in private hands.

"The Central Bank introduced new tools for the refinancing of banks during the crisis, a number of existing instruments were modified, but now there is little demand for them from the banks and over time there will be even less demand," Central Bank First Deputy Chairman Alexei Ulyukayev said, as quoted by Kommersant.

The Central Bank plans to curtail all anti-crisis measures introduced to cushion the effect of the global crisis on banks, but will implement its exit strategy step by step, the paper said.

Ulyukayev said in March that while a second wave of economic crisis was unlikely in Russia, the country was braced for a long period of recovery after the global financial meltdown.

He said the same month the Russian government was already curtailing anti-crisis measures as the country had started to exit the recession from the third quarter of 2009, but was acting cautiously to stimulate economic growth that was still fragile while also guarding against new financial bubbles.

The International Monetary Fund (IMF) said in August it expected Russia's economy to expand in 2010 after a contraction last year, but warned the government it should start reducing budget spending and launch long-awaited structural reforms.

Inflation has fallen rapidly, the current and capital accounts have both rebounded from sharp deteriorations, and the ruble has strengthened. However, the IMF said the banking system was still under strain and financial markets remained vulnerable. The key policy challenges are to reverse the large fiscal stimulus and implement structural reforms to boost potential growth.

MOSCOW, September 3 (RIA Novosti) 

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