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Russian central bank to take stocks as collateral

Russian central bank to take stocks as collateral

Russia's Central Bank said Monday it will soon take stock as collateral for short-term loans in an effort to pump extra money into the battered financial system and help Russian companies avoid selling their shares.
Central Bank deputy chairman Alexei Ulyukayev said Russian stocks may be used as collateral in the so-called repo auctions as early as next month, state news agencies reported. In a repo, a borrower puts up securities as collateral for short-term loans.
The bank's two daily repo auctions have become a major source of short-term financing amid a growing credit crunch.
Borrowers asked for more than 304 billion rubles ($11 billion) at the morning auction on Monday with 300 billion rubles on offer. The shortage of cash was especially acute for energy companies because taxes were due Monday.
Both of Russia's stock exchanges were closed Monday after falling 14 percent Friday over growing fears of a recession. Trading was to resume Tuesday on the RTS and MICEX, which are down about 75 percent since their May peak.
Ulyukayev also said the Central Bank may hold the first auction for six-month unsecured loans as early as in November. In order to qualify for the loans, banks should have a BB- rating according to Fitch Ratings or S&P, or a Ba3 rating in Moody's system.
Standard & Poor's ratings agency last week revised its outlook on Russia's long-term sovereign ratings to "negative" from "stable" as the government scrambles to bring relief to the banking sector.
The agency said it anticipated defaults among corporations and banks, as not all institutions will have access to government bailout funds. S&P also said it is concerned that the government could run a budget deficit in 2009 because of plunging oil prices, a critical driver of Russia's economy.
Russia's banking sector has been badly hit by the financial crisis with interbank lending coming to a standstill due to increased distrust among banks.


Updated : 2021-04-18 15:03 GMT+08:00