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Posted: 10/16/2008 10:09:59 AM EDT

The central bank, he said, “needs to put out the fire now and sort out who is guilty later”.


No one is guilty here in the states and no one will be found guilty in Russia.


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Thursday, October 16, 2008
Russia: First Bank Run

The first bank run in Russia…

Run on Russian bank heightens fears: “Globex on Wednesday banned depositors from withdrawing their money as confidence in the Russian banking system began to show signs of ­evaporating.

Globex, a mid-sized retail bank with assets of $4bn (€2.95bn, £2.32bn), is the first Russian bank to experience a run on deposits during the crisis. It lost 13 per cent of its deposits last month, according to Maxim Raskosnov, an analyst at Renaissance capital, and a further 15 per cent this month according to Emilya Alieva, Globex’s vice-president.

At least a dozen other Russian banks have reported a sharp rise in withdrawals and account closures.

An economist with a leading western bank in Moscow said Globex was probably the first in what could be a number of bank panics, if the government did not take concerted action soon. “I think there are a large number of small and medium sized banks that are in the same situation,” she said.

Despite a Kremlin promise of $200bn in relief funds – $87bn this week – the fall-out of a stock market plunge and the global credit crunch appears to be worse than anticipated, analysts say.

So far, the crunch has not affected the living standards of ordinary Russians, but a rash of bank failures could.

Banks across Russia have faced a rise in outflows as depositors have begun to lose trust in all but the biggest state banks, VTB and Sberbank, which have received most of the government’s liquidity support.

Tatyana Sadovskaya, the director of a branch of Khnati Mansisk Bank in the city of Nizhnevartovsk, on Wednesday told Interfax news agency that in response to rumours of her bank’s insolvency: “People have formed long lines at cashiers and at bankomats, people are taking their deposits and closing their accounts.”

Natalia Elisseva, vice-president for financial development at the Bank Nizhni Novgorod, based in the city of the same name, said the number of clients closing accounts had risen. “If there is something that can sink the banks, it is panic amongst the population . . . If there is a panic, not one bank will stand, regardless of state support.”

Mr Raskosnov said Globex was in an especially difficult situation, as a high concentration of its lending was in property, one of the sectors most under pressure from the credit crunch. He said the bank was also not rated by a leading credit rating agency, the prerequisite for central bank funding.

Globex confirmed that the ban on withdrawals had been in effect since Tuesday and blamed “demand from depositors, many of whom explained their wish to transfer their money to VTB or Sberbank”.

So far in the past two months three Russian banks have been forced into mergers as a result of the credit crisis, and analysts expect more consolidation.

Russia’s central bank made no public mention of Globex crisis, sparking criticism from ­analysts.

Alexander Khandruyev, head of the association of regional banks and former deputy central banker, called on the central bank to act immediately to allay depositors’ fears. The central bank, he said, “needs to put out the fire now and sort out who is guilty later”.

“They have delayed and delayed, and it only means the longer they leave it the more it is going to cost when they do have to rescue the banks,” he said. “If another day goes by it could happen in other banks. I don’t know what the central bank is thinking of.”

Link Posted: 10/16/2008 11:13:05 AM EDT
Link Posted: 10/16/2008 12:53:55 PM EDT
Kremlin has @ $189 billion it's made n windfall profits on oil in it's coffers…

Russia currently has the worlds 3rd largest cash reserves.
Link Posted: 10/16/2008 12:55:26 PM EDT
Don't worry.  There are plenty of stocked ATMs in the Ukraine.  Better go roll them.
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