The Russian economy may come to “a sudden stop” and a bank run “could be in the cards,” according to an analyst at Moscow brokerage UralSib Capital.
“A full-blown currency and financial-crisis scenario seems to be unfolding in Russia in what was supposed to a quiet week as we head into the holiday season,” Slava Smolyaninov, deputy head of research, wrote in an e-mailed report today. “There is a risk that the economy will come to a sudden stop, along with the banks and the overall financial system. Hence, we may have underestimated the level of financial risk in the event of a full-fledged panic. A bank run could be in the cards.”
Smolyaninov didn’t reply to a call or an e-mail seeking comment. UralSib Capital is a unit of a bank that is the 13th largest consumer lender in Russia, according to its website.
Banks in Moscow, including Citigroup Inc., ZAO Raiffeisen and Khanty-Mansiysk Otkritie Bank, yesterday reported a surge in demand for foreign currency as the ruble continued to slide after a plunge in oil prices. The currency has lost almost half its value against the dollar this year, a decline yesterday’s interest-rate increase initially failed to halt.
OAO Sberbank, Russia’s biggest lender, Alfa Bank and consumer lender TCS Bank responded today by offering clients higher interest in rubles in a bid to retain deposits.
“The financial system and banks in particular are clearly in danger as a crisis of trust seems to be developing as well,” Smolyaninov wrote. “We believe the worst is yet to come.”
Russia’s ruble-denominated Micex Index fell 1.7 percent today, while the dollar-denominated rallied 7 percent by 3:05 p.m. The ruble rebounded, snapping seven days of losses against the dollar, and gaining 2.3 percent to 65.95.