MOSCOW
More than 700 Russian banks
set to collapse: analysts
LL but Russia's strongest banks are set to collapse as the
government's three-month moratorium on private foreign
debt payments expires this weekend, analysts and officials
said.
More than 700 banks -- or about half of all Russian banks -- are
about to fail because of the rouble's 60 per cent plunge since
mid-August and the government's default on its rouble debt, of
which domestic banks were the biggest holders, said Andrei
Kozlov, first deputy chairman of the central bank.
Banks had a temporary respite from foreign debt payments through
a government order that they should not make payments on US$12
billion (S$19.8 billion) in foreign debt. By not extending that order
and pledging to help only banks it considers strategic, the
government, itself unable to pay its debts, is setting the stage for
collapse.
"We'll end up with a handful of Russian banks," said David Riley,
director of sovereign ratings at Fitch IBCA in London. "It's clear
that a number of major banks, including some of the Moscow-based
ones, without government support are not viable."
Already, at least four Russian banks have had accounts in foreign
banks blocked by courts in London and Paris because of
non-payments. More foreign creditors probably will try to seize
Russian assets abroad, analysts said.
The situation grew more complicated after the government last week
separated banks' private obligations from talks with holders of
Russia's defaulted rouble debt. -- Bloomberg
business-times.asia1.com.sg
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