UPDATE 2: VTB CEO says sees signs of consumer loan market overheating

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MOSCOW, Jun 7 (PRIME) -- There are signs that Russia’s consumer lending market is overheated, VTB CEO Andrei Kostin said on the sidelines of the St. Petersburg International Economic Forum on Friday.

“The central bank is trying to oust the most risky consumer loans from the market. And perhaps it is a right thing to do. I have come to admit, though my experts and deputies say that the market is not overheated yet, but I think that there are the signs and we must be more careful,” Kostin said.

Central Bank Chairwoman Elvira Nabiullina said on Thursday that fast expansion of consumer lending in Russia is no threat to financial stability.

Economic Development Minister Maxim Oreshkin said that the central bank has been promising to limit consumer lending for more than a year but there was a record increase in April. “I mean, there is no restrictive factor for consumer lending,” he said.

“A low level of jeopardized loans, which the central bank reiterates, is easily explainable: people relend the debt from one bank to another. This is the first story,” Oreshkin said, adding that longer terms of consumer loans and a possibility to restructure debt at lower rates create an illusion of stability but a negative spiral can start and will require extraordinary measures.

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