MOSCOW, October 21 (RIA Novosti) — The Russian banking system is not facing any systemic problems with external debt refinancing, as the 30 largest Russian banks possess a foreign currency hedge of $32 billion, according to the Central Bank of Russia’s Financial Stability Review.
The regulator reports that a survey of the country’s 30 largest credit organizations was held in September. Its goal was to evaluate the actual ageing of banks’ assets and liabilities in foreign currency for the “fourth quarter of 2014 and for 2015.”
The survey determined that that the largest banks’ liquid assets exceeded liabilities that are due in the fourth quarter of 2014 and in 2015. This foreign currency hedge amounts to $32 billion.
“Certain banks may have to deal with a lack of foreign currency liquidity due to incongruity between the amount of assets and liabilities to be repaid, but the banking sector as a whole is not facing any systemic problems with external debt refinancing,” the Central Bank of Russia concludes.
The regulator believes that according to the basic economic development scenario, which works with the assumption that the Western sanctions will not be lifted until the first half of 2015, Russian borrowers can independently repay their external debts. However, if the sanctions are maintained over an extended period of time, Russian banks and enterprises will have to reorient themselves toward the domestic loan market.
“Furthermore, a concentration of payments on external debt during certain time periods may also create a systemic influence, which may require the Bank of Russia to conduct a regular audit of sufficiency of foreign currency liquidity, and, if necessary, to enact measures to supplement the credit organizations’ foreign currency liquidity,” the report states.