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    Putin warns banks not to use state funds for currency speculation

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    Prime Minister Vladimir Putin warned Russian banks on Tuesday against using state funds for currency speculation, reminding bankers that state assistance to the financial system was not charity.

    MOSCOW, February 3 (RIA Novosti) - Prime Minister Vladimir Putin warned Russian banks on Tuesday against using state funds for currency speculation, reminding bankers that state assistance to the financial system was not charity.

    "Funds are given to banks on the basis they will be returned, and they should be spent not on financial speculations but go to the real sector in the form of loans to enterprises," Putin said at an economic conference of the government.

    The ruble, which appreciated against the U.S. dollar and the euro for most of 2008, has lost almost half of its value against the greenback since September. The ruble had steadied to 32.9 to the dollar on January 27 and experts link the latest fall to speculative action on the currency market.

    In late January, Putin praised the Central Bank's strategy of slowly devaluing the ruble was correct amid the ongoing global financial crisis and met the interests of the national economy.

    The Russian currency's official exchange rate for Wednesday is 36.13 rubles to the dollar, compared with 29.4 rubles on the last business day of 2008 and 24.7 rubles at the beginning of September.

    Putin also demanded Tuesday that relevant bodies in the government and the Central Bank monitor the situation in banks receiving state support.

    The prime minster said the government was considering 38 applications by banks for subordinated loans totaling more than 70 billion rubles ($1.9 billion).

    "Subordinated loans to three banks to the tune of 17.1 billion rubles have been approved. Thirty-eight applications worth over 70 billion rubles are being considered," he said.

    He recalled that 725 billion rubles ($20 billion) in subordinated loans was earlier given to state savings bank Sberbank, VTB and Rosselkhozbank.

    "Another 225 billion rubles in the forms of subordinated loans could also be granted to other commercial banks under condition of co-financing by private shareholders," Putin said.

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