* Cbank extends long-term credit to 549 days from 365 days
* Long-term credit to carry floating rate linked to repo
* Move aimed at giving banks more room to manage liquidity
MOSCOW, June 27 Russia's central bank said on
Friday it would extend the term of loans guaranteed by
non-marketable assets or by gold by six months to give banks
more flexibility to manage liquidity.
The central bank has been steadily easing the terms on which
it provides long-term refinancing to banks, as banks complain of
tight liquidity conditions and a lack of long-term funding.
Liquidity in the banking sector has been squeezed this year
due to a combination of risk aversion towards emerging markets
and by investor concerns over Moscow's foreign policy towards
The central bank said it would extend the length of loans
guaranteed by non-marketable assets, gold or by guarantees to 18
months from 12 months, effective as of June 30. Interest rates
on the loans will also be linked to the central bank's benchmark
rate instead of being fixed, it said.
Non-marketable assets and guarantees most commonly refer to
banks' credit claims on their clients, a less liquid form of
collateral than securities, which banks use to secure short-term
The central bank, in a statement, said that new loans of 549
days will for now carry the same interest rates as the loans
previously extended up to 365 days, which is 9.25 percent for
loans secured by non-marketable assets or guarantees and 9
percent for gold-backed loans.
However, from June 20 loans for 91 days to 549 days will be
provided at a floating interest rate linked to the bank's key
This would "enhance the impact of interest rate policy on
the economy, as the Bank of Russia's key rate movements will be
reflected in the cost of funds previously provided to credit
institutions by the Bank of Russia," the central bank said.
Its key lending rate, the one-week repo rate, stands at 7.5
percent, implying an initial spread over the key rate of 1.75
percentage points. For gold-backed loans it would be 1.5
Russian banks have long been pressing for more flexible
sources of refinancing as their loan growth continues to
outstrip weak growth in deposits, creating funding pressure on
Vladimir Kolychev, analyst at VTB Capital in Moscow, said
that the central bank's other long-term refinancing facility,
loans for banks secured against investment projects of up to
three years, looked more attractive.
Those loans are provided at a floating rate determined as 1
percentage point below the central bank key rate.
"The interest rates are very high," he said, referring to
the facilities secured against non-marketable assets and
guarantees or gold.
The central bank said it would keep the terms of its
existing loan facilities that range from two to 90 days, secured
by non-marketable assets and gold, unchanged.
(Reporting by Oksana Kobzeva and Lidia Kelly; Writing by Lidia
Kelly; Editing by Jason Bush and Susan Fenton)