The crisis which we saw in U.S. is not a danger for Russia

By Vestnik Kavkaza

Eight years ago, members of the EurAsEC signed the Agreement on Cooperation in the Sphere of Integrated Monetary Market. It guarantees to provide residential banks of the countries with a national regime. It is thought that the essence of methods and approaches to monetary policy by national banks of the EurAsEC countries is identical.

However, it is too early to talk about complete integration in the banking sphere, when it concerns freedom of capital movement and a common monetary policy.

Meanwhile, the situation in the Russain banking sector is also far from perfect. The preliminary results of the year are summed up bySergey Grigoryan, the head of the Research Department of the Association of Russian Banks.

"When the new leadership came at the CB, there was the amended strategy of the Central Bank, which consisted of three components. First, there is the campaign against the aggressive growth of consumer credit. Indeed, the target level of 20-25% per year which had been declared by the Central Bank was achieved. The second point is the fight against the not very high-quality assets accumulated during the crisis of 2008. Here, too, we also see certain steps undertaken. Finally, the third point is the fight against illegal operations, and we have already seen several big steps undertaken in this area," he said.

Speaking of important events in terms of macroeconomics, which certainly could also affect the banking system, Grigoryan pointed out: “There were fairly positive steps in refinancing the credit-monetary policy. When foreign markets are almost closed and businesses are not so active at bringing their money to the banks and the banks mainly rely on internal resources, that is deposits - what we see in the aggressive growth of the deposit portfolio - perhaps the time has come when the Central Bank becomes aware of the need for its more active stance on refinancing. In combination with steps towards refinancing, anti-inflationary measures are also very important - inflation caused by increased tariffs of natural monopolies. In the near future the banks will be able to cut interest rates and extend loan periods for consumers as well.”

According to certain information, 62 million Russian citizens have debts to banks; more than 125 million loans were granted. “If we take the share of consumer spending which is directed at loan repayment costs, it has grown over the past 6-7 years. In 2006, for example, consumers spent only 10% of their income on repaying loans, while today they spend 20%. It means there has been a twofold increase. But when we look at the international context and look at similar numbers in other countries, we find nothing frightening. Moreover, it is well known and banks mainly practice the TTI level at 45-50%. That is, if you spend more than 50% on paying your debts back, then it is dangerous, whereas if it is lower than this level then there is no great danger; consumers can see it for themselves. Therefore, I am acting here as a man who says that the risks are probably greatly overrated and probably the global risk of the crisis of sub-prime borrowers, which we saw in 2008 in the U.S., is at least 10 years away from being a danger to Russia.”