UPDATE 1-Russia opens budget funding to more banks
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MOSCOW, Sept 21 (Reuters) - Russia's Finance Ministry on Sunday extended its list of banks with access to emergency budget funding to 28 from three, which initially included only the country's largest lenders, Sberbank (SBER03.MM), VTB (VTBR.MM) and Gazprombank.
Banking sector liquidity all but dried up last week as Russian stocks experienced their worst drop since the 1998 financial crisis and banks stopped lending to each other.
The government shut markets for two days, allowing players to settle debts and promised large scale liquidity injections.
"Such a possibility will be provided for another 25 banks...," the ministry said in statement.
The ministry said it will offer 600 billion roubles ($24.21 billiion) of emergency funding for three months to all 28 banks at an auction on Monday at a minimum rate of 8.75 percent.
Russia's Treasury holds its accounts in the central bank, and the budget money is off limits to commercial banks. Four months ago the government introduced auctions at which temporarily available budget cash is put into deposits in commercial banks.
The government has a list of 28 banks that meet its credit rating and capital requirements and that can participate in auctions initially held for one-week and one-month deposits.
The three-month funds were initially offered only to the three giants, which were expected later to channel funds to smaller banks and other financial institutions through the interbank market.
The decision to extend the list follows a meeting of Finance Minister Alexei Kudrin with bankers on Saturday and a remark by the central bank's First Deputy Chairman Alexei Ulyukayev in a radio interview where he said that more banks could be allowed access to emergency funding.
The Finance Ministry last week said the total amount of budget funds available to be put on deposits at commercial banks will be increased to 1.514 trillion roubles. (Reporting by Gleb Bryanski, editing by David Cowell)
