Russia c.bank: state buying into banks unlikely

MOSCOW (Reuters) - Russian banks are, in general, unlikely to need to sell stakes to the state, the central bank's first deputy chairman, Alexei Ulyukayev, told Reuters on Friday.

Russian banks are struggling with losses and may see all their profits swept away should the proportion of bad loans within their portfolios breach 10 percent.

The bad loans figure stood at 4.5 percent as of August 1, though recent weeks have brought some grounds for optimism, with signs the economy is starting to recover from its first recession in a decade.

"We do not think the situation will be so bad that many banks will really need the state's participation in their capital... We do not see any real problems with banks' recapitalization," Ulyukayev said in an interview at the Reuters Russia Investment Summit.

Russia's finance ministry had allocated 460 billion roubles ($15 billion) to support banks through capital injections via special OFZ treasury bonds in 2009-2010. But it has since said banks will are unlikely to need all that money.

"I do not think that many banks will apply for that money," Ulyukayev said. Currently, over 70 banks meet the requirements to apply for the program.

However, the allocated money will act as an assurance to banks that the government is ready to come to their rescue, giving them the confidence to resume lending to the real economy, he said.

"It means a bank feels itself more confident, it makes it easier for banks to lend... So a bank does not need to sit on cash piles," Ulyukayev said.

The central bank also backs prolonging the maturity of state-funded subordinated loans to banks to 30 years from 10 years now, on the condition the banks' owners do the same for their subordinated loans.

"I support it. The increase (in) the banks' Tier I capital will significantly help them to tackle the bad loans problem," Ulyukayev said.

State-controlled VEB bank, obliged by the government to provide the subordinated loans to the banks, has already channeled around 400 billion roubles in loans, aiming to kick-start lending to the real economy.

($1=30.72 Rouble)

(Reporting by Oksana Kobzeva; writing by Dmitry Sergeyev; editing by Simon Jessop)