UPDATE 2: Putin orders govt, cbank to find ways to improve loan portfolios

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MOSCOW, Apr 23 (PRIME) -- President Vladimir Putin has asked the government and the central bank to develop measures to improve reliability of Russian banks’ loan portfolios without an additional burden at a meeting to discuss implementation of the recent measures to support the economy on Thursday.

“I am asking the government, the central bank and the banking community in general to think what else can be done to ensure reliability of the loan portfolios without an additional burden on the lenders,” he said.

Putin highly appraised the banks’ help to support Russian businesses and individuals amid the efforts to contain the spread of coronavirus, but again highlighted that aid should be sent at proper time without abstract promises and that the supporting banking products should be highly available to their receivers.

Putin also said that the banking community should ensure stability of the banking system, prevent any outages in the system’s operations as well as accumulation of a risky amount of non-performing loans.

It is necessary that companies continue to work and pay salaries to their staff, the president also said adding that mitigation of the negative impact of coronavirus on the economy is a joint task.

First Deputy Prime Minister Andrei Belousov said that additional state borrowing from the banks may amount to 1.5–2 trillion rubles.

“Higher lending to the state will be added to the bank’s balances. Now entire investment of the banks in securities amount to over 12 trillion rubles. The government may need additional 1.5-2 trillion rubles of debt depending on the budget situation,” he said.

The Russian banking systems feels much better now than in 2008 or 2015, it has high capital and liquidity, but the resources are not limitless, Belousov also said.

Belousov said that the mechanism of personalized aid to large companies will be launched next week.

“Starting from next week… we will launch a mechanism of personalized support of systemically important companies, similar to the mechanisms operational in 2008 and 2015. We have around 25 companies on the short list, including 11 transport, eight industrial, and six energy firms… The portfolio of liabilities in need of restructuring amounts to 200 billion rubles,” he said.

A beneficial program of lending to around 1,000 large companies with a potential size of 1 trillion rubles will also start working next week, the official added.

The government will also send around 12 billion rubles to subsidized credits to construction companies, and the program will become available at the beginning of May, he said.

Belousov also said that the program of subsidies on the existing credits of small and medium businesses will need adjustment, because it is unprofitable for banks.

Central Bank Chairwoman Elvira Nabiullina said that Russian banks are able to absorb large losses and continue lending.

“The resistance factor accumulated in the banking system should be used in a reasonable way to help the economy during the pandemic, a difficult period on the global markets. The banks indeed have entered the period in a good shape, with capital and liquidity reserves, and they are able to absorb large losses, grant loan holidays, and continue issuing loans,” she said.

Nabiullina also said that the central bank sees positive dynamics of loan restructuring, and it also sees higher demand for loan restructuring from large companies, which will need additional mechanisms.

The central bank is monitoring the current situation in lending, and is ready to introduce new necessary measures instantly, she added.

(77.0416 rubles – U.S. $1)

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