* Cbank to equalise foreign, domestic reserve requirements
* Sets flat rate of 4.25 pct
* Would make it easier for banks to borrow abroad
* External funding costs to fall by 70-170 bps - VTB
By Katya Golubkova
MOSCOW, Feb 13 The Russian central bank's move
to equalise the reserve requirements for banks' foreign and
domestic liabilities is aimed at attracting a greater inflow of
foreign capital, First Deputy Chairman Alexei Ulyukayev said on
On Tuesday the central bank announced that it was unifying
the minimum reserve requirements on Russian banks' liabilities
at a flat rate of 4.25 percent from March 1.
"We introduced this differentation (in reserve requirements)
in 2011 when there was a certain worry about possible large
cross-border capital inflows that could cause high inflation,"
"But we didn't encounter this, unlike the other BRIC
countries, for which it became a problem. And therefore
discouraging capital inflows against a background of quite a
large outflow is probably not quite correct."
Capital outflows in past years from Russia have raised
concerns that a poor investment climate is deterring both
domestic and foreign investment. The net private sector capital
outflow was $56.8 billion in 2012.
The bank's move reduces the reserve requirement for foreign
liabilities from 5.5 percent, while increasing the requirement
on domestic liabilities from 4 percent.
By lowering the cost of external funding relative to
domestic sources of funding such as household deposits, that is
expected to encourage Russian banks to increase their foreign
In a research note, analysts at VTB Capital estimated that
the change will effectively reduce banks' external funding costs
by between 70 and 170 basis points.
Last year the external debt of Russian banks rose 28 percent
to $208.4 billion. Russian banks issued some $30 billion in
Eurobonds, accounting for two-thirds of corporate issuance.
"We consider that equalising conditions for the liabilities
of banks to residents and non-residents ... is entirely normal.
This will make the competitive environment (of a) higher
quality, and allow a solution of cross-border capital flows,"
(Reporting by Katya Golubkova; Writing by Jason Bush; Editing
by Douglas Busvine)