June 30, 2009 / 11:02 AM / 10 years ago

UPDATE 1-Fitch, Alfa Bank issue bearish Russian bank views

* May need up to $80 bln of fresh capital in 09 - Fitch

* NPLs may reach 40 pct level

* Banks may need up to $130 bln - Alfa Bank president

* Russia must up recapitalisation plans ten-fold

(Recasts, adds Alfa Bank, Putin comments)

MOSCOW, June 30 (Reuters) - Russian banks need $20 billion to $80 billion in extra capital this year, a senior executive at ratings agency Fitch said, although the head of Russia’s top private bank said the need could be as high as $130 billion.

The forecasts follow a recent assessments by ratings agency Moody’s, which put the need at around $40 billion, and the central bank, which said the need for extra capital would not exceed 500 billion roubles ($16.07 billion) this year.

“We expect loans quality deterioration to be serious enough. We think the banks will need additional capital one way or another on a one-year horizon,” Alexander Danilov, senior director at Fitch’s Russian office, told a conference on Tuesday.

Danilov said the agency’s own stress test had shown that, in an optimistic scenario, non-performing loans (NPL) would reach 15 percent of banks’ loan portfolio by year-end. In the base scenario it would rise to 25 percent, and in a pessimistic scenario 40 percent.

Speaking at a separate conference, Pyotr Aven, president of Alfa Bank, Russia’s largest private bank, said the government must boost its bank recapitalisation plans 10-fold to 10 percent of gross domestic product as defaults may hit $130 billion in the next 12 months.

Aven, known for his bearish views of the impact of the crisis on the banking sector, told a conference the government’s current measures to support the banking sector were not enough.

“The banking sector needs up to 10 percent of GDP, otherwise we won’t restart,” Aven told a conference.

“We are now going down the Japanese path when problems are simply masked... We need to begin from scratch... We are not talking about liquidity, we are talking about capital, about long-term money,” he said.

Earlier, Standard and Poor’s said problem loans could soar to 35-50 percent of total lending in Russia, Ukraine and Kazakhstan, though actual loan losses would not be more than half that level in Russia [ID:nLJ957879].

Russia is discussing a plan for the government to recapitalise banks by issuing OFZ treasury bills to boost the balance sheets of the biggest banks [ID:nLJ220449], which have been severely hit by non-performing loans.

The central bank’s assessment that banks may need up to 500 billion roubles in extra capital is based on NPLs rising to 10-12 percent.

That would represent just over one percent of Russia’s 2009 $1.4 trillion GDP while Aven’s call for 10 percent would represent $140 billion.

Russia’s Central Bank Chairman Sergei Ignatyev said last week the chances of the country facing a second wave of banking crisis are “negligible” but nevertheless called bad loans and stagnation on credit markets as his main tasks in the mid-term.

The bearish comments on NPLs from Fitch and Alfa Bank come a day after Russian President Vladimir Putin told state banks to boost the economy with up to $16 billion in fresh loans and ordered bank heads “not to plan any summer holidays”. [ID:nLT723598] ($1=31.11 Rouble) (Reporting by Oksana Kobzeva; writing by Dmitry Sergeyev; editing by Simon Jessop)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below