Vedomosti: "Rescue (Plan) at 8% interest"
Vasily Kudinov and Daniil Zhelobanov
Promises turned into laws
The government will fully guarantee individual bank deposits under 700,000 roubles, and will provide 10-year subordinated loans to reliable banks at 8% interest rate.
On Friday, the State Duma adopted a package of laws aimed at shoring up the country's financial system. In keeping with President Dmitry Medvedev's promises, the government will lend 950 billion roubles to Russian banks. Sberbank is likely to receive 500 billion roubles from the Central Bank. The rest of the banks will be funded through Vnesheconombank (200 billion roubles are intended for VTB Bank, and 25 billion - for Rosselkhozbank).
By 2020, the government will transfer to Vnesheconombank (VEB) up to 450 billion roubles from the National Welfare Fund at an annual rate of 7%. VEB will be lending these funds to banks at 8%. However, only rated banks will be eligible for the loans. The rating requirements will be established later. In addition, the loans should not exceed 15% of the banks' own resources, and will be extended provided owners also contribute their resources. Prime Minister Vladimir Putin said on Friday that the subordinated loans would be issued for a period of 10 years. President Medvedev said earlier that the loans would be extended for 5 years, at a ratio of government funds to owners' funds set at 1:2. The government has met the bankers halfway and adjusted the ratio to 1:1, said Garegin Tosunyan, President of the Association of Russian Banks.
The bank deposit guarantee scheme was also revised during consideration at the Duma. The MPs have amended the bill after having passed it in the second reading. The original version of the legislation stipulated a partial guarantee for deposits under 700,000 roubles. The deputies, however, amended the bill to accommodate President Medvedev's and Prime Minister Putin's preference for fully guaranteeing deposits under 700,000 roubles.
The decision to extend a 100% guarantee to bank deposits was not coordinated with the Deposit Insurance Agency's (DIA) board of directors. "We did endorse the Dumas's original plan of a 90% guarantee," said Andrei Melnikov, DIA Deputy General Director. He mentioned, however, that DIA has always advocated a full guarantee for bank deposits. "The system will not be overextended because of the full deposit coverage. It will only increase the insurance responsibility by 2 percentage points. Financial consequences of the decision will be negligible, whereas it will fully protect 98% of all account holders in Russia," Melnikov said.
Today, the legislation will be considered by the Federation Council, the upper house of Russian parliament.
It is one of those rare historic moments when the government has both the resources and political will to actively intervene in the financial market, says Igor Kogan, Chairman of the Board at Orgresbank. Mr Kogan believes these actions are necessary.
Help from VEB
On Friday, the State Duma approved in the third reading a bill, granting VEB up to $50 billion at an annual rate of LIBOR + 1% to refinance Russian companies at a minimum rate of LIBOR +5%.
