Russian Central Bank to Discuss Longer-Term Loans, Shvetsov Says

Russia’s central bank will discuss offering funds to lenders for longer than one year, a step policy makers have resisted even as banks complained about a shortage of long-term liquidity.

“A discussion is planned, but it hasn’t started yet,” Bank Rossii Deputy Chairman Sergey Shvetsov told reporters in Moscow today. The central bank isn’t seeing a liquidity deficit in the financial industry, according to Shvetsov.

Bank Rossii, which resumed lending for as long as a year in April, is changing its approach to setting rates on longer-term facilities. The regulator will start offering cash for more than one month at variable interest rates next year and will probably use its so-called Ruonia rate for the longer-term repurchase loans, currency swaps and loans secured with non-market assets as collateral, Shvetsov said Oct. 18.

German Gref, head of Russia’s biggest lender, OAO Sberbank, has urged the central bank to expand the range of its operations and called on policy makers to offer funds denominated in foreign currency to alleviate a liquidity deficit. VTB Group Chief Executive Officer Andrey Kostin has said Russia should follow the European Central Bank’s example and provide loans for as long as three years.

The ECB flooded markets with more than 1 trillion euros ($1.3 trillion) of cheap three-year loans in December and February, sending bond yields down as banks in Spain and Italy used the funds to purchase the debt of their governments.

Russia’s central bank doesn’t need to extend three-year loans to the country’s lenders because the economy is stronger than in Europe and it’s also barred by law from offering refinancing for more than one year, Chairman Sergei Ignatiev said April 5.

To contact the reporter on this story: Scott Rose in Moscow at rrose10@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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