Raising rates on deposits in foreign currency, banks will likely seek to stop the panic among the customers, rather than to solve their current problems with liquidity. Although the latter do occur, as the increased demand for money of the regulator is observed for the fourth month in a row in periods of tax payments. That is, we are dealing with a systematic problem.
The banks had a choice: either to take a relatively expensive liquidity from the Central Bank (rates reached 9.25 percent), or to raise rates on deposits. Banks chose the Bank as fix Deposit rates in a situation of uncertainty would be to gain even more risks. It is important to note: credits taken under non-market assets, since the market is the same OFZ or other liquid instruments – have remortgaged. The situation becomes too risky.
Another issue that emerged in recent months is the outflow of client deposits. Experts call it a record with the memorable crisis of the end of 2014. The reason for the outflow is that customers are looking for their capital to more profitable harbour, and also to withdraw money for current consumption due to the continuing stagnation of income. To reverse the negative trend, Bank VTB in October this year had to raise rates on dollar deposits, today they amount to 3.2–3.5% per annum. Comparable rate and Russian agricultural Bank with Sberbank. And despite the fact that even in the summer interest rates on dollar deposits hardly exceeded 0.5 %.
But this happens on the background of the overall surplus of liquidity. In other words, those banks that are smaller, more money. This, in turn, means more and never disappeared the problem of trust on the Russian money market liquidity at times it does not move freely. At the end of this summer, the Bank of Russia estimated that the total surplus liquidity will grow to the end of the year to a level of 4 trillion rubles, but then adjusted the forecast to 1.7-2.1 trillion rubles. But even in this form, the size of the canopy of huge liquidity and indirect evidence of other chronic disease of the Russian economy – the lack of good borrowers.
In other words, the money is there, but to invest their particularly nowhere. Do not forget that, in addition to the rates of deposits growth went mortgage rates, and this will quickly affect the demand for borrowed money will lead to a cooling of the real estate market. In the absence of other points of application of investment it would mean that the overhang of liquidity rather tends to increase – contrary to the expectations of the Bank of Russia.
Of course, the major state-owned banks have dealt with a shortage of liquidity, but now they have no tradable assets and they are forced to borrow money secured by non-marketable. The surplus liquidity in the system is not evenly distributed, and mechanisms for effective redistribution, as before, no.
For further surplus liquidity will play a cooling demand. The growth in Deposit rates pulls the funds from the stock market (the problem is not banking, but economic). High demand of large banks of expensive liquidity reduces interest margins, will affect profit and ultimately will force banks to raise loan rates. The result will be an additional factor cooling demand.
Finally, the current situation in the banking sector creates risks for the ruble exchange rate. Of course, a direct impact on the Russian currency it has not, but, on the other hand, the Central Bank cannot ignore the problems of the banking system at the next decision on the key rate. In addition, the Bank of Russia believe that the price expectations of companies are still elevated, and inflation expectations of the population. And uncertainty about their future dynamics.
Analysts believe that on the background of high inflation (above 5.5% in the first half of next year), the Bank of Russia provides the exchange rate of the ruble at the level of 70 rubles to the dollar (+6-7% to the current rate). Thus, the chances that the Russian currency will weaken now, unfortunately, more than expectations on the back. But this time, exchange rate expectations are imposed on liquidity issues at big state-owned banks, which ultimately will lead to greater risks for the economy than before.