Russia: Source of Money Outflow Hasn’t Drained (it continues)

Under the CBR estimate, Russia’s foreign exchange assets amounted to $562.8 billion as of September 26, having shown the growth first time since late August. Regardless, the capital outflow continues, it may reach $45 billion from early August and the quarterly net capital outflow will be probably posted in the third quarter.

Russia’s foreign exchange assets grew by $3.4 billion to $562.8 billion September 19 to 26. They widened first time over a month; overall, they narrowed by $23.1 billion in the first three weeks of September. The assets lost $34.7 billion vs. the maxium of August 8, while the growth reached $83.5 billion from early this year.

CBR keeps its foreign exchange assets in gold, bonds and the U.S. dollar/euro/pound-denominated deposits. As of September 1, the gold portion of Russia’s reserves amounted to around $13.1 billion. The 7.9-percent growth in gold prices would have brought it to $14.1 billion by September 26, provided no sales or acquisitions had been carried out.

In a related development:

http://www.commersant.com/p1035038/financial_crisis_foreign_banks/

Foreign Banks Cut Back in Russia

Foreign banks are adjusting their development plans in Russia, forcing their Russian subsidiaries to cut back regional programs, halt some forms of crediting and plan their expenses more carefully. The Russian market looked promising when the world financial crisis brought on by the U.S. mortgage crisis began. Experts estimate that there was $30 billion in foreign money invested in Russia at the beginning of last month but, developments on the Russian financial market in September led to the outflow of $8 billion. Standard & Poor’s lowered Russia’s credit rating by one level last month. All that has led to changes in the plans of foreign banks, which had remained quite active in Russia until now.

Credit Europe Bank, the controlling package in which belongs to the National Bank of Greece, is reexamining its policy on its regional network and has declared a hiring freeze. Home Credit Bank, part of the Czech Home Credit Group and one of Russia’s largest consumer crediting organizations, has announced that it will no longer provide credit for home or auto purchases and that it will cut back on staff. ICICI Bank Eurasia, a subsidiary of ICICI Bank of India, has announced that it is halting it new mortgaging program. Swedish Swedbank, a newcomer to Russian banking, has no plans for expansion.

Rosbank, on the other hand, has increased interest on consumer deposits. “We have received confirmation that, in case of necessity, we will receive financial aid from our French shareholders Societe Generale,” stated forst deputy chairman of Rosbank Igor Antonov.

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