VTB sees fewer Russia banks, economic slowdown-paper
MOSCOW, Oct 9 (Reuters) - The financial crisis will cut the number of banks in Russia's banking sector and could shave two percentage points off economic growth, a leading banker was quoted as saying on Thursday.
"If the state and the central bank do not intervene, then I can say for sure that mortgage lending will stop, and a gross domestic product slowdown by 2 percentage points is certain," Mikhail Zadornov, the head of VTB-24, the retail banking arm of Russia's second-largest lender VTB (VTBR.MM) (VTBRq.L), told Kommersant business daily in an interview.
His forecast is gloomier than that of Russian officials, who have said the crisis will take no more than one percentage point off Russia's economic growth which was forecast to come in at a 7.8 percent this year and 6.7 percent in 2007.
Not all of Russia's 1,000-plus banks will survive, he said, forecasting that state and foreign-owned banks will take market share from private domestic banks and some of the players in the sector will fail -- though not the big ones.
"I think that already before the end of the year the banking system will lose a number of players, but it won't be big banks. As far as 2009 is concerned, it will be much tougher," Zadornov was quoted as saying.
"We cannot come out of this crisis as quickly as 10 years ago, because it is a crisis of the core of the global financial system. This crisis could be deep and lingering," said Zadornov, who was a finance minister during Russia's default in 1998.
Russia's banking system has lost its access to cheap foreign money since the global credit crisis took hold last year.
Lack of confidence has also largely dried up the domestic interbank money market. With money less readily available and more expensive, companies have already started to scale back future projects and current production and to cut staff.
Even state controlled VTB-24 with an access to state funds has been affected.
"The changed circumstances demand that we cut costs ... Firstly, we will cut costs through reducing investment," Zadornov said. "The reduction of staff is also not ruled out."
(Reporting by Dmitry Sergeyev; Editing by Ruth Pitchford)
