By Elena Fabrichnaya, Oksana Kobzeva and Christian Lowe
MOSCOW (Reuters) – The bulk of banking loans in Russia should be in roubles to minimise risks related to currency fluctuations, Elvira Nabiullina, Russian central bank governor, told Reuters in an interview.
As weak oil and sanctions have knocked the rouble, the central bank has taken drastic measures, including hiking the benchmark interest rate in December 2014 to 17 percent. The rate is now 11 percent.
The central bank has also started tightening regulation to contain risks related to foreign currency exposure in the Russian banking system, already asking banks to set aside more capital against retail forex loans.
“Sharp currency fluctuations which we have seen have shown that forex risks are very significant both for our banks and for borrowers,” Nabiullina told Reuters.
The central bank had introduced favourable exchange rates that banks could use to value their foreign-currency assets to help them minimise the amount of capital they had to set aside against potential losses. Banks were returned to the market rates on Jan. 1.
“Forex risks should be lowered to prevent them from turning into systemic risks. We are now discussing an increase of risk coefficients for forex loans to companies,” Nabiullina said.
The central bank said earlier that the measure to set more capital aside for forex loans to companies was due to take effect from April 1.
She added that the central bank was also considering making banks set aside more reserves for retail and corporate forex deposits.
ROUBLES TO ROUBLES
Russia is among the top energy producing and exporting nations globally and its companies include the world’s biggest oil producer, Rosneft (ROSN.MM), and leading global gas producer Gazprom (GAZP.MM), both by volumes.
Nabiullina noted that forex risks are lower for an exporting company than for one with no forex revenue.
“We don’t have a specific estimate (for forex share in banking assets) but we think that the bulk of loans should be in roubles,” she said.
Nabiullina added that foreign exchange risks were accumulated in the real estate and retail sectors. “The share of forex loans is big there but at the same time, there is no forex revenue in those sectors,” she said.
(Reporting by Elena Fabrichnaya, Oksana Kobzeva and Christian Lowe; writing by Katya Golubkova, editing by Jason Bush/Ruth Pitchford)
